- Blockchain research firm nChain has found itself in hot water with auditors
- The company filed its annual accounts weeks late, in which auditors accuse it of not keeping accurate records
- nChain made an $11.7 million loss in 2023, up from a $9.7 million loss in 2022
British blockchain company nChain could be in trouble after auditors said that they were unsure if the company has kept accurate records. nChain was supposed to file its accounts up to December 2023 at the end of last year, but they were only filed yesterday, and they don’t make pretty reading. Auditors BKL signed off the audit with a disclaimer that they were “unable to satisfy ourselves over the reliability of the financial statements as a whole” and questioned whether adequate records had been kept as the company increased its losses by almost £2 million, leading to questions over the running of the ten-year-old company.
The Mighty Keep Falling
nChain claims to be one of the biggest blockchain patent holders in the world and, until recently, was the employer of the famed Satoshi Nakamoto pretender and convicted fraudster Craig Wright. Many of the patents owned by nChain, which number in the thousands, are the result of patent attorneys turning Wright’s ramblings into patentable material.
However, the company suffered a catastrophe in September 2023 when its CEO and several board members were fired for blowing the whistle on the company’s operations, accusing shadow directors of running the company for their own personal means. Wright, who lost his job days before this implosion, lost his case against the Cryptocurrency Open Patent Alliance in March 2024, and it seems that the tumult affected the record-keeping:
Due to the outcome of recent court cases involving persons who served as directors of the company during the period under review, we, as auditors, did not consider it appropriate to place reliance on representations made by or on behalf of the board. As a result of this we were unable to satisfy ourselves over the reliability of the financial statements as a whole.
These records, it should be remembered, were submitted weeks past the deadline, which is always suggestive of malpractice, and BLK makes no bones about this:
…we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records have been kept.
This, in addition to the late filing, will make for uncomfortable reading for Elena Anatolievna Spiers-King, the company’s current CEO (the third in 18 months), especially given that she is an accountant.
nChain Losses Piling Up
nChain’s dodgy record keeping might be understandable if the company was going in the right direction, but the alleged financial impropriety didn’t help it any: its losses increased from £7.27 million ($9.7 million) to £9.45 million ($11.7 million) between 2022 and 2023. It has been suggested that the reason for nChain’s delayed accounts was that the company could not find an auditor willing to sign off on them, which is entirely believable given that the eventual auditors were allowed to absolve themselves of any blame if they put their name to it.
nChain might have endured a torrid last year and a half, but it seems that whatever is around the corner isn’t that much brighter, either, and the blockchain world will await their 2024 filings with fascination.