BTC Trader Asked Me For An Audit
I woke up this morning to find this story waiting in my inbox. Since company failures are commonplace in the digital currency industry, I didn’t think much of it at first. Then I read this line:
“Questions about the platform’s solvency began to emerge in June, when users asked for the Bitcoin Trader leadership to publish financial audits, though such a disclosure had not been issued.”
That reminded me that a person who called himself John Carley, using the e-mail address “btctrader.biz@gmail.com” recently contacted me to ask for an audit of his company, which he identified as BTC Trader. By recently, I mean in the last six weeks or so (I’d have to check my e-mails to say exactly when). In fact, the process of developing a solution that would meet his needs is what prompted me to write this post recently. The discussion seemed promising enough that I was starting to wonder whether BTC Trader would pull the trigger on an audit. It now appears that I won’t be conducting that engagement.
Normally, I would not disclose a client relationship or even a prospective client relationship. There aren’t many things that people are more private about or protective of than their financial details. However, this is an unusual case. If BTC Trader fell victim to its own poor management, then customers should know that the company at least tried to have an audit done on their behalf. Admittedly, I have no way to know whether the inquiry was in good faith.
I’m not sure what this means- maybe something, maybe nothing. Hopefully, this piece of information will be helpful to BTC Trader’s customers as they attempt to recover their funds.
well done!
I would love to hear you describe how you would go about auditing a bitcoin company and what steps you would take that are different than a traditional GAAS audit. What are the procedures that need to evolve or be developed in a bitcoin world?
The legal definition of an audit requires two things- it must be conducted by a licensed CPA and it must be conducted in accordance with GAAS. Digital currencies are a new and unique asset, but not so new or so unique that they cannot be audited. Practitioners frequently get hung up on one of two things in this space- either their unfamiliarity or unwillingness to work with digital currencies or on the insistence of the client that the engagement be carried out using a decentralized, autonomous solution. Right now, the public accounting industry isn’t equipped to provide that. Further, as trusted agents, we don’t have much of an incentive to. The weak point of public company auditing is and always has been the willingness of some clients or practitioners to lie. On the other hand, auditors are kept honest (usually) by the desire to do good and honest business and thus to stay employed. I would be glad to discuss the procedure I proposed to BTC Trader with you via e-mail if you want to hit me up. I will be the first one to admit that it isn’t “THE” procedure, but it is a good place to start in uncharted territory.
Thank you for this post. You may be interested to learn that BitCoin Trader claimed they HAD had such an audit performed (they stopped trading for a day while they “did it”. They claimed that they were still working on the report and that they intended to run such an audit every six months.
We heard nothing more until John Carley stopped any pretence at trading, sent out an email claiming he had been against an audit from the beginning, further claimed that the company’s BitCoin wallet had been hacked (a known lie because people have been tracing the wallets he used), took down his website and disappeared off the face of the earth.
It sounds to me as if you had a lucky escape from the thieving John Carley and Michael Brandenburg. I stand by those words, incidentally. Should they come threatening to sue, they have my client email address along with my funds and those of family and friends who I introduced to what i thought was a good opportunity.
I have no fear of being sued. Criminals are unlikely to seek the spotlight. Incidentally, John Carley has form (I ahev since learned). See http://www.sec.gov/litigation/admin/33-8480.htm