Should crypto exchanges be audited quarterly?

[Rubel007]

Regular audits of central exchanges will build user confidence and increase transparency. There are many exchangers that can be scammed by scammers. They will never get any such opportunity if they are regularly monitored there. Moreover, even if there are any errors, it will be revealed. If a special organization is formed to carry out this operation, it can definitely have a good effect. If the SEC tries to fulfill this responsibility itself, there will be a lot of controversy because it is now known to many investors as a corrupt institution. But overall, with the audit system properly managed, there will definitely be benefits to the common investors.

[bayu7adi]

Agreed... that seems to be able to minimize the chaos that FTX did. An audit will clearly ensure that the exchange's quality is maintained provided that the party carrying out the audit must have good credibility and be neutral. And this could become a new security standard for an exchange to prevent problems such as fraud or embezzlement of funds.

Cryptocurrencies are often used as a cover for fraud, therefore extra supervision is needed apart from tokens or coins, as well as from exchanges so that they have a valid security status.

[Faisal2202]

Personally, I think auditing a CEX on a quarterly basis will help users make informed decision of whether to continue using a particular CEX or find a better alternatives. I will like your thought on this subject matter.

That's a good thought, but my question is who will audit the exchange, there are a number of good audit firms but projects have known them very well, and they easily make changes in their structure in order to pass them. But my concerns here are if another firm/third party will audit the CEX so that it would be known to the public that something fishy is happening, then how you can say audit helps us to know our gains, and losses and make strategic moves to avoid the loss.

As these are done by third parties and if not then should be, and they should serve the purpose of bringing the truth of the exchange in front of us, not to help them make strategic moves so that they could cover there aces. And yeah if a proper audit is done on FTX which they did by themselves and tampered it with fake numbers to avoid people's reaction.

[Captain Corporate]

Quarterly seems like its a lot if you ask me. Maybe twice a year? I mean even once a year in a good situation would work if they pick a trusted good audit company. If they do that then we are going to definitely see them do fine, it shouldn't really be that bad. I think quarterly would make sense and I think that should be something that could mean something for everyone to be fair. I think that's the most important part and I feel like that could mean a good increase eventually. Thats my guess at least and I feel like doing something way too much could cause a lot of trouble for them if they are careless.

[Crwth]

Shouldn't this come from the regulators? I think if you are acquiring a VASP license in a certain country, you should know that it will be about auditing and making sure that there's no way that you would be able to scam someone who would use the service.

Quarterly is a great timeframe already.

[CryptoTalisman]

First of all, I think that in addition to regular audits, the criteria for starting centralized exchanges should be tightened to the extent that not everyone who considers himself capable of such a job can open them.

If, for example, someone did a serious check on Sam Bankman, he could very easily conclude that he is not a person who should be given the opportunity to deal with anything related to finance - the man is incapable of uttering two meaningful sentences, and they gave him an opportunity to embezzle billions $.

Therefore, audits should be at least twice a year, and the license to start such a business should be equal to starting a bank.

This is quite Affirmative. Background/Integrity check is very important just have you have started. Never thought of that angle. No one runs a bank without proper lincensing but the challenge in crypto for now is we dont have a body to regulate and enforce any compliance for now hence our best option is to check the past record of the exchanges we use. 

[CryptoTalisman]

its good to be edited once and then their wallet just need to be public because people will keep watching it, maybe sends some signals whenever there is activity going on in their wallets.

if there really is the need for transparency, the community i think will need a new regulatory board to review and audit. SEC is just too corrupt to make these auditing.
the first exchange to check i think is BGB, a fast rising one. it outrank exchanges that have been round for years. its suspicious.

Actually Bitget has been in the news for so many good reasons lately and if they can continue with that moment, they could be the next household name crypto exchange like Binance

[Freemind]

Audits are usually positive when making certain assessments of possible risks, but not always. Something better, and that would give greater credibility and reputation to any exchange, is to deposit all guaranteed deposits (although not all exchanges have it) in an external escrow. The problem with exchanges themselves protecting their own collateral funds is that, in the event of a collapse, those funds can also disappear. If it is an external escrow that is guarding those funds there should be no problem, and users affected by the exchange's bankruptcy could receive all the lost funds, and they could continue with their trading activities.

Something like this could have prevented, at least in part, many of the disasters we have seen in the industry. But I am almost 100% sure that no exchange would be willing to allow another company to protect its reserve funds. And the answer is very simple.

[UNIVERSE]

It seems that if the audit were more detailed and technically formal, some countries might have done it. I'm not sure which ones. but if it is an audit to implement transparency and avoid various possible bad things like what happened to FTX, the state may be able to be the agent. and indeed this audit is meaningful for CEX, right?

Carrying out this audit also means that the exchange already has a license from a regulated and trusted institution. In this case, each country [asit has its own institutions. And like here, every exchange is required to carry out audits from several platforms, institutions and others which are of course trustworthy. such as: Certified Information Systems Auditor (CISA), Certified Information Systems Security Professional (CISSP), and various other audits that are possible and required. because, the audit system turns out not only on assets but also on the technique to guarantee that an exchange is still viable and provides security guarantees for its users.

However, when it comes to time, audits are usually carried out throughout the year, right> yearly? Or if necessary, maybe it will be 6 months later. because the audit system is not easy and requires various complex things and detailed data. But usually if exchange reporting is done, it can be done monthly, right?

[bayu7adi]

Something like this could have prevented, at least in part, many of the disasters we have seen in the industry. But I am almost 100% sure that no exchange would be willing to allow another company to protect its reserve funds. And the answer is very simple.

Of the most popular mechanisms, perhaps instead of entrusting money to someone else, it is better to insure it to prevent something bad from happening. Indeed, this seems to have several loopholes to keep losing, but at least it minimizes the damage received by the stock exchange.

In relation to credibility and also the assessment of the party conducting the audit, I think there is a connection. And the trust of users at large is the main reason for assessing exchanges based on audit results so this also brings in many new users too. So, there will always be a relationship between the audit results and also the sustainability of the exchange platform to become the main choice of crypto users.

[joniboini]

I believe this should be the standard, although implementation will face some troubles. If you can't find any trusted auditor I'm not sure if it still has any value though. If that happens, reports can mean nothing, fake, etc. Not sure how the government in your area is doing, but people in my country find it hard to trust the government to do anything properly, while any NGO has little to no power to run independently and do anything meaningful. So that's that.

That being said, even if we can find one, I'd still be skeptical of the accuracy of such reports and would assume that the data is true for the security of the past. I'd still assume that the exchange can lose their money easily for the next quarter so I'd never store money there far longer than necessary.

[AvatarSiri]

its good to be edited once and then their wallet just need to be public because people will keep watching it, maybe sends some signals whenever there is activity going on in their wallets.

if there really is the need for transparency, the community i think will need a new regulatory board to review and audit. SEC is just too corrupt to make these auditing.
the first exchange to check i think is BGB, a fast rising one. it outrank exchanges that have been round for years. its suspicious.

Actually Bitget has been in the news for so many good reasons lately and if they can continue with that moment, they could be the next household name crypto exchange like Binance

Through, just saw a report about their spot Volume increase last month.🤩

[Z-tight]

This would work for people who trust such things, i believe if it is done by a third party, you still have to trust the auditing firm and the exchange can also manipulate things in order to balance the books. I might be kind of paranoid here, but if the auditing if for people to have trust in them and store their funds in centralized exchanges, then it is a no for me.

[robelneo]

Personally, I think auditing a CEX on a quarterly basis will help users make informed decision of whether to continue using a particular CEX or find a better alternatives. I will like your thought on this subject matter.

All of us will agree on this we as a customer have the right to know if the exchange is still good and the regulator should protect the investor and traders' interest if this is done at a specific time many investors' money will be saved that's how they do in the banking system I think its better that the regulators do this.
Of course, there is a possibility of manipulation by the exchange to show that they can sustain their operation but it's in the hands of the regulators on how to address this issue and the regulator should be worth the trust of the traders and exchange to make the decision.

[jeraldskie11]

I believe that auditing quarterly is acceptable because doing it on a daily basis would be a waste of time. However, checking quarterly does not imply that we cannot discover any questionable conduct on an exchange anytime. There are many traders who are skilled in technical and can detect fraudulent activities on an exchange. Aside from that, exchanges will not do so since they generate money from transaction fees and are registered with the SEC. That is, if they make a terrible decision, their identity will be exposed on the SEC.