Armanino is ending its crypto audit practice and dropping clients, two sources familiar with the matter say.
The unit may be folding under pressure from Armanino’s non-crypto clients, concerned that reputational risk to the firm will throw their audits into question, according to a source with knowledge of the firm’s crypto offerings. Last month, Armanino was named in a class-action lawsuit for failing to catch irregularities at FTX.US after performing the exchange’s audit last year. The suit was filed by Stephen Pierce, an FTX customer who allegedly lost $20,000.
Armanino did not respond to requests for comment.
Armanino began offering support for the crypto industry in 2014. The company’s crypto and digital assets web page advertises a host of services including proof-of-reserve audits and stablecoin attestations, two areas that are seeing increasing demand as crypto exchanges rush to reassure customers of their stability following the demise of several rivals, including FTX.
Adding to demand for crypto audit services, venture-capital firm Sequoia Capital reportedly told fund investors that it will require even early-stage startups’ financial statements to be audited by a Big Four accounting firm, according to the Wall Street Journal.
Despite demand, prominent accounting firms may be hesitant to take on clients in the crypto industry where there are not yet clear accounting standards.
“Big Four audit firms are in a good position to leverage their know-how and credibility, but they are bound to be more choosy in this type of environment,” Javier Paz, director of data and analytics at Forbes, says.