Please point out how your (or the wikipedia) definition of an "audit" differs from the documents demonstrated above.
An audit validates a financial statement. Where is that statement?
"Since audit reports tend to be addressed to the current shareholders, .."
I understand your point but unless you're a shareholder (or investor) then you don't get to see the report. This is no different to any company, publicly traded companies publish financial reports and privately held companies don't.
However the sort of audit we are discussing here verifies the viability/solvency of the institution and I don't see too many banks publishing that kind of information. Where can I see that my bank can honour all deposits if the account holders choose to withdraw ?
To prove solvency, an exchange must basically show that (A+B)-(X+Y) is positive, or at least not too negative; where A and B its assets in BTC and national currencies, X and Y are the client account balances in BTC and national currencies, say converted at current prices; or, better than A-X is not negative, AND B-Y is not negative. (The math should include all assets and debts, including bank loans, but let's simplify for this discussion).
I see your point but I'm going to pick on your formulae and suggest for an exchange to be solvent A-X should be positive and so should B-Y.
Essentially all account holders should be able to withdraw 100% of their funds at any time in the currency the balance is held in.
Any assets/liabilities (bank loans, investments, etc etc) relate to the profitability of the company and is a separate balance sheet.
By moving the coins, Bitstamp "proved" that (in december) A = 194,933 BTC. (It did not prove such thing actually; do I need to tell you why? But let's pretend it did.)
They proved they have access to the private keys of wallets totalling 194,933 BTC.
We have their
word (that trust thing we do with banks) that this represents "A" and is the balance held to honour customer accounts.
The letter from the auditor says that A-X is positive. How did they get X?
I would hope that they found X by adding up all the customer balances where the currency is BTC.
They would also need to account for trades sitting on the exchange of course but this should be trivial.
When Antonopoulos "audited" Coinbase, he used the value of X that Coinbase gave him. (That is what I understood, and I cannot imagine how he could have got it except through them. Correct me if I am wrong.)
I don't see why Coinbase is relevant and I'd rather not change subject if that's ok with you.
I have seen some audit reports before, including from the "inside", and I think I can tell when they are stretching the words to cover the holes. What I read in that terse letter is that they verified A as above, but (like Antonopoulos) they trusted the value of X that Bitstamp provided them.
In that case your personal experience is being factored in here and that is understandable and a personal choice much akin to which bank we trust with our money. Personally I think this will be covered by regulation in future and bitcoin exchanges (or any companies which hold customer balances) will be regulated to require that they must honour all customer balances.
This will be an interesting development and can only be a good thing since I don't believe the banks are regulated that tightly
The letter does not mention B and Y.
But they did.... well for USD at least so I admit there's no mention of the EUR balance but I think that's their primary Fiat balances covered.
"The report identified that Bitstamp held 100% of validated BTC balance and USD funds."
Anyway.... that's me done for now
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