SEC Chief Accountant Warns Accounting Firms to Beware Crypto Platform Misrepresentations

SEC Chief Accountant Paul Munter warned accounting firms about crypto asset trading platforms that misrepresent non-audit work when marketing to investors. Mr. Munter reminded accounting firms that they could be held legally liable for misstatements made by their client companies in the crypto asset space about such work.

Mr. Munter underscored the importance of auditor independence, stating that accountants must consider how their non-auditor services and relationships impact their ability to "maintain independence, both in fact and appearance." He said that market participants who seek registration with the SEC should consider how any of their non-audit engagements would meet applicable independence requirements.

Mr. Munter pointed to companies in the crypto asset space that have misled customers concerning the services that crypto clients received from accounting firms. Mr. Munter made clear that non-audit arrangements are "neither as rigorous nor as comprehensive as a financial statement audit, and may not provide any reasonable assurance to investors." Further, Mr. Munter stated that if an accounting firm becomes aware of misleading statements made by a client, the accounting firm should make a "noisy withdrawal" by ending its association with the client via public statement and informing the SEC.