John Reed Stark, a former U.S. Securities and Exchange Commission (SEC) regulator, said that Binance’s recent “proof of reserves” report is how he defines a “red flag.”
Stark alleged that the recent report “doesn’t address the effectiveness of internal financial controls” nor “express an opinion or assurance conclusion,” adding that it fails to “vouch for the numbers.”
In legal terminology, an “assurance conclusion” is where the auditor evaluates whether the evidence obtained is “sufficient and appropriate” and then offers a conclusion about whether the sources are free from misrepresentation.
Stark worked for the SEC for 18 years, founding the Commission’s Office of Internet Enforcement. He serves as president of his own cybersecurity-focused consultancy, as well as an adjunct professor at the Duke School of Law.
Stark has also been an outspoken critic of certain other companies within the crypto ecosystem as well.
Pulling no punches, the consultant said, “Tether is a house of cards” and “is running a Ponzi scheme” in a recent tweet, pointing to “evasion/deflection/lack of responsiveness” on the part of the stablecoin giant.
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