United States Senators Elizabeth Warren and Ron Wyden have cited the recent collapse of three major banks to call on the Public Company Accounting Oversight Board to “rein in” audits of crypto firms.

In a March 21 letter to Public Company Accounting Oversight Board chair Erica Williams, Warren and Wyden reiterated concerns over “shady audits” of crypto companies the pair raised in January, this time referencing the failures of Silvergate Bank, Silicon Valley Bank, and Signature Bank. The two senators requested Williams respond to questions on whether improper audits and proof-of-reserve reports “may have played a direct or indirect role” in the collapse of the banks.

“You have ample authority to establish standards for auditors that require any SEC-registered auditor to only conduct audits of crypto firms that comply with existing standards for audit quality,” said the letter. “Based on the obvious threats to investors and the public interest posed by sham audits, any audits and reviews of crypto firms done by SEC-registered auditors must maintain a high level of scrutiny. Otherwise, these sham audits must be addressed by PCAOB.”

Congress and the Fed weakened stress tests and other rules to prevent big banks from taking on too much risk and crashing the economy — all so banks could make bigger profits. Banks can’t be trusted to regulate themselves. Congress and our regulators need to step up. https://t.co/AVcFr7g3GB

— Elizabeth Warren (@SenWarren) March 21, 2023

Warren and Wyden suggested that defunct crypto exchange FTX, currently in bankruptcy court for Chapter 11 proceedings, could have impacted the events around Silvergate and Signature, given the firm “received sham financial reviews” by auditors registered with the PCAOB:

“In assessing the risks associated with the FTX’s deposits, as well as those of other crypto-related customers, the banks may have relied on the misleading and faulty financial information provided by proof-of-reserve examinations.”

Related: Crypto firms may turn to ‘shadow banks’ following major collapses — Molly White

The two senators requested Williams provide a staff-level briefing on March 31, and respond to the questions raised by April 4.

Warren, an outspoken critic of many aspects of the digital asset space in Congress, has been pointing to a lack of regulatory oversight as part of the reason behind the failure of the aforementioned banks. On March 15, she requested Federal Reserve chair Jerome Powell recuse himself from any review of regulatory failures leading to the collapse of Silicon Valley Bank.

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