Multiple accounting firms associated with FTX auditing got sued over the matter by investors
Investors who sued FTX –
Prager Metis CPAs LLC, an auditor for FTX, was sued by an investor who claims to lost almost $20,000. Stephen Pierce also sued Armanino LLP, an auditor for FTX US.
An accounting firm that claims to be the first one to open its headquarters in the metaverse was also accused in the matter. Followed by a lawsuit for turning a blind eye to a pattern of racketeering at FTX working. The crypto asset exchange collapsed causing billions of dollars in losses and losing investors money in the process.
Lawsuits and their sources –
Much of the lawsuit relies on a sworn declaration in FTX’s bankruptcy proceedings from John J. Ray III. He has famously oversaw the liquidation of Enron Corp. Mentioning the FTX Collapse Ray said in his 40-year career he has never seen such a “complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
Both accounting firms have supported FTX, rather than skeptical auditors. Pierce claims in the lawsuit, citing a Wall Street Journal article. Mentioned in the lawsuit that Armanino tweeted “Let’s go, buddy,” tagging Bankman-Fried in advance of his testimony before Congress, according to the lawsuit.
Reactions of the Audit companies and former CEO of FTX –
Prager Metis declined to comment on the lawsuit. Armanino didn’t respond to a request for comment. Pierce is seeking unspecified damages in the proposed class-action case, filed Wednesday in San Francisco federal court.
Armanino and Prager Metis issued certified audit reports giving FTX US and FTX clean bills of health in March, according to the lawsuit.
“Auditors are required by regulators to maintain a ‘professional skepticism’ of their clients, including alertness to errors and fraud when assessing a company’s finances,” Pierce’s lawyers wrote in the complaint. “Neither Armanino nor Prager Metis did so here.”
It’s the latest lawsuit against Bankman-Fried and FTX over the exchange’s collapse. Earlier suits also targeted celebrities who promoted the platform.
