The Securities and Exchange Commission in the United States has reached a settlement with Prager Metis, the auditor for FTX Derivatives Exchange. Prager Metis, which was FTX’s internal auditor before its collapse, was under scrutiny for its lack of due diligence in auditing the company’s financial records to identify any inconsistencies.
In the aftermath of the FTX collapse, many observers in the cryptocurrency industry pointed fingers at the SEC for inadequate oversight. Seeking resolution following the criticisms, the SEC sought closure from all parties involved in FTX’s downfall, leading to Prager Metis being implicated. The SEC accused the auditing firm of misrepresenting FTX’s financial status and failing to adhere to auditing standards between February 2021 and April 2022.
The SEC also noted Prager Metis’ failure to disclose the heightened risks associated with FTX’s connection to Alameda Research, ultimately charging the firm with negligence-based fraud. In the settlement, Prager Metis has agreed to pay $1.95 million to resolve allegations of misconduct in its audits of the now-defunct crypto trading platform and violations of auditor independence.
This settlement follows the SEC’s recent crackdown on Flyfish Club’s NFT membership concept, imposing a $750,000 fine for violating securities laws. The SEC deemed Flyfish Club’s NFTs as securities due to their potential resale value and potential for passive income through leasing.
Commissioners Mark Uyeda and Hester Pierce expressed disagreement with the SEC’s actions, arguing that the agency, under Gary Gensler, was overly focused on cryptocurrencies as evidenced by its increasing enforcement actions against crypto firms. They emphasized that the intention of a buyer should not dictate whether an asset qualifies as a security.
Source: [CoinGape](https://coingape.com/)