Bitfinex announced today it is working with Friedman LLP to complete a comprehensive third-party audit of its balance sheets. The company added that results will be available in June 2017.
Bitfinex described the move as its “next step toward cementing customer and shareholder confidence.”
Friedman LLP, a New York City-based accounting firm, lists “digital currency” as one of its areas of expertise. In November 2015 it became official auditor for the Bitcoin Investment Trust, on behalf of sponsor Grayscale Investments LLC. Grayscale is a subsiduary of Barry Silbert’s Digital Currency Group.
Friedman’s interest in Bitcoin goes back a few years. Senior manager Alan Goldenberg published an article concerning Bitcoin’s tax implications in January 2015.
Announcement Comes After Criticism of Previous Audit
The announcement comes in the wake of criticism yesterday that Bitfinex had not “engaged” blockchain forensics firm Ledger Labs to audit its accounts last year. Bitfinex had previously mentioned it was working with Ledger but provided few updates until this week.
Bitfinex clarified that Ledger had actually investigated the technical side of the hack, but had been unable to perform a financial audit. It promised to make an announcement on that issue today, which it now has. However It has not yet published the results of Ledger’s technical investigation.
The company yesterday also said its search for a reputable accounting firm capable of doing such an audit had taken longer than expected. Brandon from Bitfinex Community Services told Bitsonline:
“Pursuing a financial audit is not a recent undertaking by Bitfinex. As a cryptocurrency exchange, courting an auditing firm is by no means a simple task. If you review the history of cryptocurrency exchanges, you will find that independent audits are essentially nonexistent, let alone from a respected accounting firm. Such audits are typically outright avoided. We will be unique in this aspect as we achieve a level of transparency no other cryptocurrency exchange has willingly pursued.”
How Bitfinex Moves Forward From Here
Bitfinex also noted that engaging a financial auditor is “just the first step”. Producing a satisfactory report by June 2017 will require considerable time and resources on both sides.
As well as announcing the audit, Bitfinex said it would also be “undertaking a process to optimize our financial operations and streamline internal accounting procedures as we push toward the goal of having fully audited financials (both balance sheet and operating results) in 2018.”
Bitfinex said on 3rd April that it had 100% redeemed all outstanding BFX tokens. The company issued these digital tokens to customers who had lost funds in the August 2016 hack as a form of IOU. Some considered the action controversial, others innovative and groundbreaking. It enabled Bitfinex to continue operating as an exchange business while finding ways to make users whole.
The August hack, which involved 120,000 BTC, was the second-largest in Bitcoin’s history. Those who lost money in the largest, at Mt. Gox, are still waiting for any kind of restitution more than three years later.
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