US watchdog should step up oversight of crypto auditors, say Democratic senators

Jan 26 (Reuters) – Democratic U.S. Senators Elizabeth Warren and Ron Wyden are calling on the nation’s accounting watchdog to step up oversight of firms that audit cryptocurrency companies following the collapse of the crypto exchange FTX.

In a letter to the U.S. Public Company Accounting Oversight Board (PCAOB) released Thursday, Warren and Wyden questioned the agency, which oversees registered accounting firms around the world, about why firms auditors working with FTX failed to identify the company’s mismanagement and lack of internal controls alleged by federal prosecutors.

“When PCAOB-registered auditors perform bogus audits — even for companies that may be outside the PCAOB’s jurisdiction — they tarnish the PCAOB’s credibility,” Warren and Wyden wrote.

A PCAOB spokesperson confirmed the board had received the letter and said it would respond directly to lawmakers.

“We look forward to working with them on our common goal of protecting investors,” the spokesperson said.

US prosecutors in Manhattan have accused FTX founder and former CEO Sam Bankman-Fried of stealing billions of dollars in client funds to make up for losses at his hedge fund, Alameda Research. Bankman-Fried has previously acknowledged risk management failures at FTX, but said he does not believe he has criminal liability.

Prior to its collapse and filing for bankruptcy in November, FTX said it was subject to audits by PCAOB-listed companies Armanino and Prager Metis. Representatives for Armanino and Prager Metis did not immediately respond to requests for comment.

Reporting by Hannah Lang and Douglas Gillison in Washington; Editing by Josie Kao

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