FTX Auditor Prager Metis Settles With US SEC For Negligence

FTX auditor Prager Metis has settled with the US SEC for negligence in its role in the platform's collapse. The SEC accused the auditing firm of misrepresenting FTX's financial position and failing to meet auditing standards. Prager Metis will pay $1.95 million to resolve the allegations.

The United States Securities and Exchange Commission (SEC) has settled with FTX Derivatives Exchange’s auditor Prager Metis. The startup served as the in-house auditor for FTX prior to its collapse and faced probe from the regulator for its negligence in auditing the firm’s books.

The Commission accused Prager Metis of falsely misrepresenting FTX’s financial position and failing to meet generally accepted auditing standards between February 2021 and April 2022. The failure to disclose increased risk stemming from the relationship between FTX and Alameda Research was also highlighted by the SEC.

Prager Metis will pay $1.95 million to resolve two actions alleging misconduct in its audits of the now-defunct crypto asset trading platform, and auditor independence violations. The fine includes $745,000 civil penalty, a combined civil penalties of $1 million, and combined disgorgement with prejudgment interest of $205,000.

This FTX auditor settlement comes after the $750,000 fine levied on Flyfish Club NFT for violating securities laws. The regulator issued an order against Flyfish Club, LLC, for the unregistered sale of NFTs between August 2021 and May 2022.

Commissioners Mark Uyeda and Hester Peirce do not agree with the SEC’s action and jointly released a statement emphasizing how the intent of a buyer cannot transform a non-security asset into a security.

Source: Coingape