The SEC announced a settlement with Spicer Jeffries, a Denver-based private fund auditing firm, on March 29.
Sean Tafaro, an audit engagement partner, was also accused of “improper professional behavior” in connection with two private fund audits. According to the SEC, Spicer Jeffries and Tafaro determined that “investment valuation constituted a substantial fraud risk,” but they did not implement the intended audit approach to address the risk.
Additionally, the Public Company Accounting Oversight Board has approved the firm (PCAOB). According to its website, this enables it to perform audits of SEC registrants and securities broker-dealers.
The move could be the latest attempt by the securities authority to dismantle the cryptocurrency business and any entities associated with it. Spicer Jeffries organized a “Cryptocurrency Expert Panel” for the Palm Beach Hedge Fund Association in 2018. (PBHFA).
“Hedge fund managers and quants mixed with investors, technologists, venture capitalists, and digital asset gurus, among many others,” the business said at the time.
The SEC increased its monitoring of auditing firms that work with digital asset clients in December 2022. “We’re telling investors to be very skeptical of some of the claims that are being made by crypto businesses,” said Paul Munter, the agency’s acting top accountant, to the WSJ.
The SEC accused Spicer Jeffries of “failing to gather appropriate audit evidence” about the process of assessing fair value and valuation models in the most recent settlement.
“The order further finds that Spicer Jeffries’ weak quality control system resulted in failures to adhere to professional auditing requirements,” it continues. The firm did not confirm or reject the claims, but it did consent to the SEC’s decision finding them to have engaged in unlawful professional conduct.
Spicer Jeffries consented to be censured and to have its quality control systems and processes reviewed by an independent expert. Uncle Sam’s assault on cryptocurrency does not appear to be ending anytime soon.
Gary Gensler, chairman of the Securities and Exchange Commission, testified before the Financial Services Subcommittee on March 29. In his testimony, he asked for more financing for the agency in the fiscal year 2024 budget request.
This would lead to further enforcement action against cryptocurrency companies. According to Gensler, the “Wild West of crypto markets,” which is “rife with noncompliance,” requires more attention.
