The post FTX Auditor Prager Metis Settles SEC Charges Over ‘Negligence’ appeared on BitcoinEthereumNews.com.

The U.S. Securities and Exchange Commission (SEC) announced Tuesday that FTX’s former auditor, Prager Metis, has reached a $1.95 million settlement with the regulator. The agreement resolves allegations of negligence-based fraud stemming from Prager Metis’ relationship with the collapsed crypto exchange. At the same time, the agreement covers alleged violations of auditor independence rules dating back as early as 2017. Per the regulator, a $745,000 civil penalty applies to the FTX violations, while just over $1.2 million will be paid for violating the auditor rules. Prager Metis penned two auditing reports for the exchange co-founded and once run by Sam Bankman-Fried, who received a 25-year prison sentence in March after being convicted on a series of fraud charges for his role in FTX’s mismanagement last year. He appealed that ruling last week. The team assembled by Prager Metis “lacked the competence, experience, and knowledge to appropriately conduct the audits,” the SEC said in a complaint, adding that the auditor “fundamentally did not understand FTX” or its relationship with Alameda Research. As part of the settlement, Prager Metis agreed to retain an independent consultant to review its auditing policies, while restrictions were put in place on its ability to accept new clients. Alameda, a trading fund owned by Bankman-Fried, secretly siphoned billions of dollars of customer money from FTX before both firms collapsed in November 2022. During his criminal trial, members of Bankman-Fried’s inner circle testified that the trading firm could borrow virtually unlimited amounts of money from the now-defunct exchange. Prager Metis’ auditing procedures “largely excluded Alameda,” the SEC said, as the auditor failed to assess misleading materials provided by FTX. Additionally, Prager Metis didn’t dig deep enough after FTX told the auditor it loaned funds to the trading firm, the SEC said. Under generally accepted accounting standards, Prager Metis…

---

Filed under: News - @ September 18, 2024 12:24 am