Page 1 EXHIBIT A-72Page 2 March 31,
A1manino LLP
50 W San Fernando Street
San Jose, California This representation letter is provided in connection with your audit of the financial statements of BAM
Trading Services Inc. (the "Company"), which comprise the balance sheet as of December 31, 2020, and
the related statements of operations, stockholder's equity, and cash flows for the year then ended, and the
related notes to the financial statements, for the purpose of expressing an opinion as to whether the
financial statements are presented fairly, in all material respects, in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement. An omission or misstatement that is monetarily small in amount could be considered
material as a result of qualitative factors.
We confirm, to the best of our knowledge and belief, as of March 31, 2021, the following representations
made to you during your audit.
Financial Statements
I.
We have fulfilled our responsibilities, as set out in the tenns of the audit engagement letter dated
October 21 , 2020, including our responsibility for the preparation and fair presentation of the
financial statements.
2.
The financial statements referred to above are fairly presented in conformity with U.S. GAAP.
3.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
4.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5.
Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.
6.
Related party relationships and transactions have been appropriately accounted for and disclosed
in accordance with the requirements of U.S. GAAP.Page 3 7.
All events subsequent to the date of the financial statements and for which U.S. GAAP requires
adjustment or disclosure have been adjusted or disclosed. We have disclosed to you all impacts on
our business and operations of the current COVID-19 pandemic of which we are aware. Those
impacts include the following:
a
the Company has experienced minimal operational effects due to being a decentralized
software platform in a decentralized market;
b
due to the widespread uncertainty over the macroeconomic factors and sovereign monetary
policies which could impact consumer demand for our services, the financial impact cannot
be reasonably estimated at this time.
8.
We acknowledge the projected material misstatement you identified from your testing related to
chargeback expenses in the amount of $150,000 does not materially impact the financial
statements taken as a whole.
9.
The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
I 0. Significant estimates and material concentrations have been properly disclosed in accordance with
U.S. GAAP.
11. Guarantees, whether written or oral, under which the Company is contingently liable, have been
properly recorded or disclosed in accordance with U.S. GAAP.
12. The Company believes the assumptions and estimates used to value the provision for transaction
losses to be complete and accurate.
13. We acknowledge the customer funds payable recorded on the balance sheet as of December 3 I,
2020 is complete and accurate.
14. We acknowledge the token indemnity customer deposit recorded on the balance sheet as of
December 31, 2020 is complete and accurate.
15. We acknowledge the related party Due to Parent recorded on the balance as of December 31 , is complete and properly disclosed in accordance with U.S. GAAP.
16. We have provided to you all documents related to the Company's equity transactions. We confirm
to the best of our knowledge and belief, that all transactions were properly recorded and disclosed
in accordance with U.S. GAAP.
17. We agree all common stock outstanding as of December 31, 2020 is complete and accurate.
18. We acknowledge that prior to you performing the following nonattest services:Page 4 a
Assistance with the preparation of the financial statements and related footnotes
That we understood that in order for you to maintain your independence, we must assume all
management responsibilities for the nonattest services. Including designating a qualified
individual with suitable skill, knowledge, or experience, from our senior management to
oversee the nonattest services, evaluate the adequacy and results of the nonattest services, and
accept responsibility for them. Therefore, we assigned Josh Sroge, CFO, and Elaine Stone,
Finance Manager, to oversee and evaluate the adequacy and results of the nonattest services
and they have accepted responsibility for them.
19. We are in agreement with the adjusting journal entries you have proposed. All audit adjustments
proposed by you have been posted to the Company's accounts.
Information Provided
20. We have provided you with:
a
Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the financial statements, such as records, documentation, and other matters.
b
Additional information that you have requested from us for the purpose of the audit.
c
Unrestricted access to persons within the Company from whom you determined it necessary
to obtain audit evidence.
21. All material transactions have been recorded in the accounting records and are reflected in the
financial statements.
22. We have disclosed to you the results of our assessment of the risk that the financial statements
may be materially misstated as a result of fraud.
23. We have no knowledge of any fraud or suspected fraud that affects the Company and involves:
a
Management,
b
Employees who have significant roles in internal control, or
c
Others where the fraud could have a material effect on the financial statements.
24. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company's
financial statements communicated by employees, former employees, analysts, regulators, or
others.
25 . We have disclosed to you all known instances of noncompliance or suspected noncompliance with
laws and regulations whose effects should be considered when preparing financial statements.
26. We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the financial statements.Page 5 27. We have disclosed to you the identity of the Company's related parties and all the related party
relationships and transactions of which we are aware.
28. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed in the notes to the
financial statements.
29. We believe the reports generated from our system used to support the digital asset balances and
transactions are complete and accurate, including both market and cost basis.
30. We believe our accounting for digital assets and financial statement disclosures are complete and
accurate.
3 1. We confirm, through our Wallet Custody Agreement with Binance Holdings Limited (BHL), the
Company has right of ownership of all corporate digital assets and right of control over all
custodial digital assets.
32. We are not aware of any security breach, corruption, destruction or loss of private keys that would
prevent our custodian, BHL, from exerting control over any digital wallet holding either corporate
or custodial digital assets held on our behalf.
33. The Company believes there are no contingent liabilities or grounds for compensation owed to any
customers as it relates to non-supported forked assets and airdrops.
34. We do not have (a) asserted and unsettled income tax contingencies, or (b) unasserted income tax
contingencies caused by uncertain tax positions taken in our income tax returns filed with the
Internal Revenue Service and state, and local tax authorities that are probable of assertion by such
tax authorities under the provisions of ASC 450. Furthermore, we have not received either written
or oral tax opinions that are contrary to our assessment.
35. All transactions and balances not related to the Company have been properly identified and
excluded from the financial statements.
36. We acknowledge the customer custodial cash deposits recorded on the balance sheet as of
December 31, 2020 is complete and accurate.
37. The Company acknowledges that prior to li sting a new digital asset, the Company evaluates the
digital asset for viability of the digital asset's use-cases, protocol security, and compliance with all
local laws and regulations.
38. We confirm that the cost sharing services and expenses incurred by the Parent on behalf of the
Company have been appropriately charged, at a reasonable mark up, to the Company.
39. We confirm that expenses incurred or obligations due for services between the Company and BHL
under any of its arrangements with BHL, including the Software License Agreement, Master
Services Agreement, Trademark License Agreement and Wallet Custody Agreement are properly
recorded and disclosed as of and for the year ended December 3 1, 2020.Page 6 40. Revenue from contracts with customers has been appropriately accounted for and disclosed in
accordance with FASB Accounting Standards codification Topic 606, Revenue from Contracts
with Customers. All revenue transactions represent valid transactions with our customers. All
contracts with underlying revenue recognized in the financial statements have commercial
substance and have been approved by appropriate parties, and we have considered side
agreements, implied promises, and unstated business conventions in identifying performance
obligations in the contracts. We have sufficient and appropriate documentation supporting all
estimates and judgments underlying the amount and timing of revenue recognized in the financial
statements. We believe the revenue recognized during the year ended December 31, 2020 is
complete and accurate.
41. The Company recorded and prepared transfer pricing documentation related to the intercompany
transaction(s) between the U.S., foreign owners, affiliates and related parties following the
requirements addressed in Internal Revenue Code Sections 482 and 6662, and associated
regulations before the timely filing of the Company's 2020 federal income tax return. The
Company will reflect the impact of any transfer pricing adjustment in its financial statements
thereafter. The Company will document the transfer pricing arrangement with its U.S.
subsidiary(s) following the requirements addressed in Internal Revenue Code Sections 482 and
6662 and associated regulations. The Company will reflect the impact of any transfer pricing
adjustment in the subsidiary's separate financial statement. Related to it's 2020 income tax
return(s) the Company will:
a
File consolidated U.S. corporation income tax return for the year ended December 31 , 2020,
on or before the extended due date of the return;
b
The U.S. subsidiaries will authorize its parent corporation to include it in a consolidated
return filing for the same period by signing Form 1122, Authorization and Consent of
Subsidiary Corporation to be Included in a consolidated income tax return filing;
c
Timely file 7004, Application for Automatic Extension of Time To File Certain Business
Income Tax, to include all wholly-owned U.S. subsidiaries;
d
Report any foreign (affiliate) monetary and nonmonetary transactions, including but not
limited to intercompany transactions, payments and relevant nonmonetary transactions with
its related parties on Forms 5472, Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business;
e
Schedule UTP, Uncertain Tax Position Statement; and
42. We have adequately considered the impact of COVID-19 pandemic and determined that we are
not aware of any specific event or circumstance that would require an update to our estimates or
judgments or a revision of the carrying value of our assets or liabilities. We have disclosed to you
all impact on our business and operations of the current COVID-19 pandemic of which we are
aware.
43. We received a term note through the Paycheck Protection Program ("PPP Loan") under the
Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). We repaid the loan with
interest during the year ended December 31, 2020 and the terms of the proceeds and repayment
have been properly presented in the financial statements.Page 7 44. Except as disclosed in the footnotes to the financial statements, no events have occurred
subsequent to the balance sheet date and through the date of this letter that would require
adjustment to, or disclosure in, the financial statements.
Ca~
r l , 2021 05:25 GMT+4)
Catherine Coley, CEO
Josh Sroge, CFOPage 8 March 31,
A1manino LLP
50 W San Fernando Street
San Jose, California This representation letter is provided in connection with your audit of the consolidated financial statements
of BAM Management US Holdings Inc. (the "Company"), which comprise the consolidated balance sheet
as of December 31, 2020, and the related consolidated statements of operations, stockholders' equity, and
cash flows for the year then ended, and the related notes to the financial statements, for the purpose of
expressing an opinion as to whether the consolidated financial statements are presented fairly, in all
material respects, in accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable
person relying on the information would be changed or influenced by the omission or misstatement. An
omission or misstatement that is monetarily small in amount could be considered material as a result of
qualitative factors.
We confirm, to the best of our knowledge and belief, as of March 31 , 2021, the following representations
made to you during your audit.
Financial Statements
I.
We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
October 21 , 2020, including our responsibility for the preparation and fair presentation of the
consolidated financial statements.
2.
The consolidated financial statements referred to above are fairly presented in conformity with
U.S. GAAP.
3.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
4.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5.
Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.Page 9 6.
Related party relationships and transactions have been appropriately accounted for and disclosed
in accordance with the requirements of U.S. GAAP.
7.
All events subsequent to the date of the consolidated financial statements and for which U.S.
GAAP requires adjustment or disclosure have been adjusted or disclosed. We have disclosed to
you all impacts on our business and operations of the current COVID-19 pandemic of which we
are aware. Those impacts include the following:
a
the Company has experienced minimal operational effects due to being a decentralized
software platform in a decentralized market;
b
due to the widespread uncertainty over the macroeconomic factors and sovereign monetary
policies which could impact consumer demand for our services, the financial impact cannot
be reasonably estimated at this time.
8.
We acknowledge the projected material misstatement you identified from your testing related to
chargeback expenses in the amount of $150,000 does not materially impact the financial
statements taken as a whole.
9.
The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
10. Significant estimates and material concentrations have been properly disclosed in accordance with
U.S. GAAP.
11. Guarantees, whether written or oral, under which the Company is contingently liable, have been
properly recorded or disclosed in accordance with U.S. GAAP.
12. The Company believes the assumptions and estimates used to value the provision for transaction
losses to be complete and accurate.
13. We acknowledge the customer funds payable recorded on the balance sheet as of December 31,
2020 is complete and accurate.
14. We acknowledge the token indemnity customer deposit recorded on the balance sheet as of
December 31, 2020 is complete and accurate.
15. We acknowledge the related paity note payable recorded on the balance as of December 3 1, is complete and properly disclosed in accordance with U.S. GAAP.
16. We have provided to you all documents related to the Company's equity transactions. We confirm
to the best of our knowledge and belief, that all transactions were properly recorded and disclosed
in accordance with U.S. GAAP.
17. We agree all common stock and preferred stock outstanding as of December 31, 2020 is complete
and accurate.Page 10 18. We are in agreement with the adjusting journal entries you have proposed. All audit adjustments
proposed by you have been posted to the Company's accounts.
19. We acknowledge that prior to you performing the following nonattest services:
a
Assistance with the preparation of the consolidated financial statements and related footnotes
That we understood that in order for you to maintain your independence, we must assume all
management responsibilities for the nonattest services. Including designating a qualified
individual with suitable skill, knowledge, or experience, from our senior management to
oversee the nonattest services, evaluate the adequacy and results of the nonattest services, and
accept responsibility for them. Therefore, we assigned Josh Sroge, CFO, and Elaine Stone,
Finance Manager, to oversee and evaluate the adequacy and results of the nonattest services
and they have accepted responsibility for them.
Information Provided
20. We have provided you with:
a
Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the consolidated financial statements, such as records, documentation, and
other matters.
b
Additional infonnation that you have requested from us for the purpose of the audit.
c
Unrestricted access to persons within the Company from whom you determined it necessary
to obtain audit evidence.
21. All material transactions have been recorded in the accounting records and are reflected in the
consolidated financial statements.
22. We have disclosed to you the results of our assessment of the risk that the consolidated financial
statements may be materially misstated as a result of fraud.
23 . We have no knowledge of any fraud or suspected fraud that affects the Company and involves:
a
Management,
b
Employees who have significant roles in internal control, or
c
Others where the fraud could have a material effect on the consolidated financial statements.
24. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company's
consolidated financial statements communicated by employees, former employees, analysts,
regulators, or others.Page 11 25. We have disclosed to you all known instances of noncompliance or suspected noncompliance with
laws and regulations whose effects should be considered when preparing consolidated financial
statements.
26. We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the consolidated financial statements.
27. We have disclosed to you the identity of the Company's related parties and all the related party
relationships and transactions of which we are aware.
28. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed in the notes to the
consolidated financial statements.
29. We believe the reports generated from our system used to support the digital asset balances and
transactions are complete and accurate, including both market and cost basis.
30. We believe our accounting for digital assets and financial statements disclosures are complete and
accurate.
3 1. We confirm, through our Wallet Custody Agreement with Binance Holdings Limited (BHL), the
Company has right of ownership of all corporate digital assets and right of control over all
custodial digital assets.
32. We are not aware of any security breach, corruption, destrnction or loss of private keys that would
prevent our custodian, BHL, from exerting control over any digital wallet holding either corporate
or custodial digital assets held on our behalf.
33. The Company believes there are no contingent liabilities or grounds for compensation owed to any
customers as it relates to non-supported forked assets and airdrops.
34. We do not have (a) asserted and unsettled income tax contingencies, or (b) unasserted income tax
contingencies caused by uncertain tax positions taken in our income tax returns filed with the
Internal Revenue Service and state, and local tax authorities that are probable of assertion by such
tax authorities under the provisions of ASC 450. Furthermore, we have not received either written
or oral tax opinions that are contrary to our assessment.
35. We acknowledge the customer custodial cash deposits recorded on the consolidated balance sheet
as of December 31 , 2020 is complete and accurate.
36. The Company acknowledges that prior to listing a digital asset, the Company evaluates the digital
assets for viability of the digital asset's use-cases, protocol security, and compliance with all local
laws and regulations.
37. We confirm that expenses incurred or obligations due for services between the Company and BHL
under any of its arrangements with BHL, including the Software License Agreement, Master
Services Agreement, Trademark License Agreement and Wallet Custody Agreement are properly
recorded and disclosed as of and for the year ended December 31, 2020.Page 12 38. Revenue from contracts with customers has been appropriately accounted for and disclosed in
accordance with FASB Accounting Standards codification Topic 606, Revenue from Contracts
with Customers. All revenue transactions represent valid transactions with our customers. All
contracts with underlying revenue recognized in the financial statements have commercial
substance and have been approved by appropriate parties, and we have considered side
agreements, implied promises, and unstated business conventions in identifying performance
obligations in the contracts. We have sufficient and appropriate documentation supporting all
estimates and judgments underlying the amount and timing of revenue recognized in the financial
statements. We believe the revenue recognized during the year ended December 31, 2020 is
complete and accurate.
39. The Company recorded and prepared transfer pricing documentation related to the intercompany
transaction(s) between the U.S., foreign owners, affiliates and related parties following the
requirements addressed in Internal Revenue Code Sections 482 and 6662, and associated
regulations before the timely filing of the Company's 2019 federal income tax return. The
Company will reflect the impact of any transfer pricing adjustment in its financial statements
thereafter. The Company will document the transfer pricing arrangement with its U.S.
subsidiary(s) following the requirements addressed in Internal Revenue Code Sections 482 and
6662 and associated regulations. The Company will reflect the impact of any transfer pricing
adjustment in the subsidiary's separate financial statement. Related to it's 2020 income tax
return(s) the Company will:
a
File consolidated U.S. corporation income tax return for the year ended December 31 , 2020,
on or before the extended due date of the return;
b
The U.S. subsidiaries will authorize its parent corporation to include it in a consolidated
return filing for the same period by signing Form 1122, Authorization and Consent of
Subsidiary Corporation to be Included in a consolidated income tax return filing;
c
Timely file 7004, Application for Automatic Extension of Time To File Certain Business
Income Tax, to include all wholly-owned U.S. subsidiaries;
d
Report any foreign (affiliate) monetary and nonmonetary transactions, including but not
limited to intercompany transactions, payments and relevant nonmonetary transactions with
its related parties on Forms 5472, Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business;
e
Schedule UTP, Uncertain Tax Position Statement; and
40. We have adequately considered the impact of COVID-19 pandemic and determined that we are
not aware of any specific event or circumstance that would require an update to our estimates or
judgments or a revision of the carrying value of our assets or liabilities. We have disclosed to you
all impact on our business and operations of the current COVID-19 pandemic of which we are
aware.
41. We received a term note through the Paycheck Protection Program ("PPP Loan") under the
Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). We repaid the loan with
interest during the year ended December 31, 2020 and the terms of the proceeds and repayment
have been properly presented in the consolidated financial statements.Page 13 42. Except as disclosed in the footnotes to the financial statements, no events have occurred
subsequent to the balance sheet date and through the date of this letter that would require
adjustment to, or disclosure in, the consolidated financial statements.
Ca~
r l , 2021 05:25 GMT+4)
Catherine Coley, CEO
Josh Sroge, CFOPage 14 BAM Trading Services Inc. - Management Rep.
Letter - Final 3.31.Final Audit Report
2021-04-
Created:
2021-03-
By:
Heather Moore (Heather.Moore@amllp.com)
Status:
Signed
Transaction ID:
CBJCHBCAABAAo04j9eb2VxD_woyfMVyWGV4AAGxCjQc
"BAM Trading Services Inc. - Management Rep. Letter - Final 3.
31.2021" History
~ Document created by Heather Moore (Heather.Moore@amllp.com)
2021-03-31 - 6:26:29 PM GMT- IP address: 38.1 11.205.
~ Document emailed to Catherine Coley (coley@binance.us) for signature
2021-03-31 - 6:27:35 PM GMT
I::. Document emailed to Joshua Sroge Uoshua.sroge@binance.us) for signature
2021 -03-31 - 6:27:35 PM GMT
~ Email viewed by Catherine Coley (coley@binance.us)
2021-03-31 - 6:27:38 PM GMT- IP address: 74.1 25.216.
~ Email viewed by Joshua Sroge Uoshua.sroge@binance.us)
2021-03-31 - 6:27:39 PM GMT- IP address: 74.125.212.
0o
Document e-signed by Joshua Sroge Uoshua.sroge@binance.us)
Signature Date: 2021-03-31 - 6:29:32 PM GMT - Time Source: server- IP address: 76.25.83.
0o
Document e-signed by Catherine Coley (coley@binance.us)
Signature Date: 2021 -04-01 - 1:25:11 AM GMT - Time Source: server- IP address: 94.200.232.
Agreement completed.
2021 -04-01 -1:25:11 AM GMT
. >:
arman1no
I
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PDF Page 1
PlainSite Cover Page
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Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 1 of 14
EXHIBIT A-72
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Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 2 of 14
March 31, 2021
A1manino LLP
50 W San Fernando Street
San Jose, California 95113
This representation letter is provided in connection with your audit of the financial statements of BAM
Trading Services Inc. (the "Company"), which comprise the balance sheet as of December 31, 2020, and
the related statements of operations, stockholder's equity, and cash flows for the year then ended, and the
related notes to the financial statements, for the purpose of expressing an opinion as to whether the
financial statements are presented fairly, in all material respects, in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement. An omission or misstatement that is monetarily small in amount could be considered
material as a result of qualitative factors.
We confirm, to the best of our knowledge and belief, as of March 31, 2021, the following representations
made to you during your audit.
Financial Statements
I.
We have fulfilled our responsibilities, as set out in the tenns of the audit engagement letter dated
October 21 , 2020, including our responsibility for the preparation and fair presentation of the
financial statements.
2.
The financial statements referred to above are fairly presented in conformity with U.S. GAAP.
3.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
4.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5.
Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.
6.
Related party relationships and transactions have been appropriately accounted for and disclosed
in accordance with the requirements of U.S. GAAP.
PDF Page 4
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 3 of 14
7.
All events subsequent to the date of the financial statements and for which U.S. GAAP requires
adjustment or disclosure have been adjusted or disclosed. We have disclosed to you all impacts on
our business and operations of the current COVID-19 pandemic of which we are aware. Those
impacts include the following:
a
the Company has experienced minimal operational effects due to being a decentralized
software platform in a decentralized market;
b
due to the widespread uncertainty over the macroeconomic factors and sovereign monetary
policies which could impact consumer demand for our services, the financial impact cannot
be reasonably estimated at this time.
8.
We acknowledge the projected material misstatement you identified from your testing related to
chargeback expenses in the amount of $150,000 does not materially impact the financial
statements taken as a whole.
9.
The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
I 0. Significant estimates and material concentrations have been properly disclosed in accordance with
U.S. GAAP.
11. Guarantees, whether written or oral, under which the Company is contingently liable, have been
properly recorded or disclosed in accordance with U.S. GAAP.
12. The Company believes the assumptions and estimates used to value the provision for transaction
losses to be complete and accurate.
13. We acknowledge the customer funds payable recorded on the balance sheet as of December 3 I,
2020 is complete and accurate.
14. We acknowledge the token indemnity customer deposit recorded on the balance sheet as of
December 31, 2020 is complete and accurate.
15. We acknowledge the related party Due to Parent recorded on the balance as of December 31 , 2020
is complete and properly disclosed in accordance with U.S. GAAP.
16. We have provided to you all documents related to the Company's equity transactions. We confirm
to the best of our knowledge and belief, that all transactions were properly recorded and disclosed
in accordance with U.S. GAAP.
17. We agree all common stock outstanding as of December 31, 2020 is complete and accurate.
18. We acknowledge that prior to you performing the following nonattest services:
PDF Page 5
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 4 of 14
a
Assistance with the preparation of the financial statements and related footnotes
That we understood that in order for you to maintain your independence, we must assume all
management responsibilities for the nonattest services. Including designating a qualified
individual with suitable skill, knowledge, or experience, from our senior management to
oversee the nonattest services, evaluate the adequacy and results of the nonattest services, and
accept responsibility for them. Therefore, we assigned Josh Sroge, CFO, and Elaine Stone,
Finance Manager, to oversee and evaluate the adequacy and results of the nonattest services
and they have accepted responsibility for them.
19. We are in agreement with the adjusting journal entries you have proposed. All audit adjustments
proposed by you have been posted to the Company's accounts.
Information Provided
20. We have provided you with:
a
Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the financial statements, such as records, documentation, and other matters.
b
Additional information that you have requested from us for the purpose of the audit.
c
Unrestricted access to persons within the Company from whom you determined it necessary
to obtain audit evidence.
21. All material transactions have been recorded in the accounting records and are reflected in the
financial statements.
22. We have disclosed to you the results of our assessment of the risk that the financial statements
may be materially misstated as a result of fraud.
23. We have no knowledge of any fraud or suspected fraud that affects the Company and involves:
a
Management,
b
Employees who have significant roles in internal control, or
c
Others where the fraud could have a material effect on the financial statements.
24. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company's
financial statements communicated by employees, former employees, analysts, regulators, or
others.
25 . We have disclosed to you all known instances of noncompliance or suspected noncompliance with
laws and regulations whose effects should be considered when preparing financial statements.
26. We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the financial statements.
PDF Page 6
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 5 of 14
27. We have disclosed to you the identity of the Company's related parties and all the related party
relationships and transactions of which we are aware.
28. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed in the notes to the
financial statements.
29. We believe the reports generated from our system used to support the digital asset balances and
transactions are complete and accurate, including both market and cost basis.
30. We believe our accounting for digital assets and financial statement disclosures are complete and
accurate.
3 1. We confirm, through our Wallet Custody Agreement with Binance Holdings Limited (BHL), the
Company has right of ownership of all corporate digital assets and right of control over all
custodial digital assets.
32. We are not aware of any security breach, corruption, destruction or loss of private keys that would
prevent our custodian, BHL, from exerting control over any digital wallet holding either corporate
or custodial digital assets held on our behalf.
33. The Company believes there are no contingent liabilities or grounds for compensation owed to any
customers as it relates to non-supported forked assets and airdrops.
34. We do not have (a) asserted and unsettled income tax contingencies, or (b) unasserted income tax
contingencies caused by uncertain tax positions taken in our income tax returns filed with the
Internal Revenue Service and state, and local tax authorities that are probable of assertion by such
tax authorities under the provisions of ASC 450. Furthermore, we have not received either written
or oral tax opinions that are contrary to our assessment.
35. All transactions and balances not related to the Company have been properly identified and
excluded from the financial statements.
36. We acknowledge the customer custodial cash deposits recorded on the balance sheet as of
December 31, 2020 is complete and accurate.
37. The Company acknowledges that prior to li sting a new digital asset, the Company evaluates the
digital asset for viability of the digital asset's use-cases, protocol security, and compliance with all
local laws and regulations.
38. We confirm that the cost sharing services and expenses incurred by the Parent on behalf of the
Company have been appropriately charged, at a reasonable mark up, to the Company.
39. We confirm that expenses incurred or obligations due for services between the Company and BHL
under any of its arrangements with BHL, including the Software License Agreement, Master
Services Agreement, Trademark License Agreement and Wallet Custody Agreement are properly
recorded and disclosed as of and for the year ended December 3 1, 2020.
PDF Page 7
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 6 of 14
40. Revenue from contracts with customers has been appropriately accounted for and disclosed in
accordance with FASB Accounting Standards codification Topic 606, Revenue from Contracts
with Customers. All revenue transactions represent valid transactions with our customers. All
contracts with underlying revenue recognized in the financial statements have commercial
substance and have been approved by appropriate parties, and we have considered side
agreements, implied promises, and unstated business conventions in identifying performance
obligations in the contracts. We have sufficient and appropriate documentation supporting all
estimates and judgments underlying the amount and timing of revenue recognized in the financial
statements. We believe the revenue recognized during the year ended December 31, 2020 is
complete and accurate.
41. The Company recorded and prepared transfer pricing documentation related to the intercompany
transaction(s) between the U.S., foreign owners, affiliates and related parties following the
requirements addressed in Internal Revenue Code Sections 482 and 6662, and associated
regulations before the timely filing of the Company's 2020 federal income tax return. The
Company will reflect the impact of any transfer pricing adjustment in its financial statements
thereafter. The Company will document the transfer pricing arrangement with its U.S.
subsidiary(s) following the requirements addressed in Internal Revenue Code Sections 482 and
6662 and associated regulations. The Company will reflect the impact of any transfer pricing
adjustment in the subsidiary's separate financial statement. Related to it's 2020 income tax
return(s) the Company will:
a
File consolidated U.S. corporation income tax return for the year ended December 31 , 2020,
on or before the extended due date of the return;
b
The U.S. subsidiaries will authorize its parent corporation to include it in a consolidated
return filing for the same period by signing Form 1122, Authorization and Consent of
Subsidiary Corporation to be Included in a consolidated income tax return filing;
c
Timely file 7004, Application for Automatic Extension of Time To File Certain Business
Income Tax, to include all wholly-owned U.S. subsidiaries;
d
Report any foreign (affiliate) monetary and nonmonetary transactions, including but not
limited to intercompany transactions, payments and relevant nonmonetary transactions with
its related parties on Forms 5472, Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business;
e
Schedule UTP, Uncertain Tax Position Statement; and
42. We have adequately considered the impact of COVID-19 pandemic and determined that we are
not aware of any specific event or circumstance that would require an update to our estimates or
judgments or a revision of the carrying value of our assets or liabilities. We have disclosed to you
all impact on our business and operations of the current COVID-19 pandemic of which we are
aware.
43. We received a term note through the Paycheck Protection Program ("PPP Loan") under the
Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). We repaid the loan with
interest during the year ended December 31, 2020 and the terms of the proceeds and repayment
have been properly presented in the financial statements.
PDF Page 8
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 7 of 14
44. Except as disclosed in the footnotes to the financial statements, no events have occurred
subsequent to the balance sheet date and through the date of this letter that would require
adjustment to, or disclosure in, the financial statements.
Ca~
r l , 2021 05:25 GMT+4)
Catherine Coley, CEO
Josh Sroge, CFO
PDF Page 9
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 8 of 14
March 31, 2021
A1manino LLP
50 W San Fernando Street
San Jose, California 95113
This representation letter is provided in connection with your audit of the consolidated financial statements
of BAM Management US Holdings Inc. (the "Company"), which comprise the consolidated balance sheet
as of December 31, 2020, and the related consolidated statements of operations, stockholders' equity, and
cash flows for the year then ended, and the related notes to the financial statements, for the purpose of
expressing an opinion as to whether the consolidated financial statements are presented fairly, in all
material respects, in accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable
person relying on the information would be changed or influenced by the omission or misstatement. An
omission or misstatement that is monetarily small in amount could be considered material as a result of
qualitative factors.
We confirm, to the best of our knowledge and belief, as of March 31 , 2021, the following representations
made to you during your audit.
Financial Statements
I.
We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
October 21 , 2020, including our responsibility for the preparation and fair presentation of the
consolidated financial statements.
2.
The consolidated financial statements referred to above are fairly presented in conformity with
U.S. GAAP.
3.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
4.
We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5.
Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.
PDF Page 10
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 9 of 14
6.
Related party relationships and transactions have been appropriately accounted for and disclosed
in accordance with the requirements of U.S. GAAP.
7.
All events subsequent to the date of the consolidated financial statements and for which U.S.
GAAP requires adjustment or disclosure have been adjusted or disclosed. We have disclosed to
you all impacts on our business and operations of the current COVID-19 pandemic of which we
are aware. Those impacts include the following:
a
the Company has experienced minimal operational effects due to being a decentralized
software platform in a decentralized market;
b
due to the widespread uncertainty over the macroeconomic factors and sovereign monetary
policies which could impact consumer demand for our services, the financial impact cannot
be reasonably estimated at this time.
8.
We acknowledge the projected material misstatement you identified from your testing related to
chargeback expenses in the amount of $150,000 does not materially impact the financial
statements taken as a whole.
9.
The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
10. Significant estimates and material concentrations have been properly disclosed in accordance with
U.S. GAAP.
11. Guarantees, whether written or oral, under which the Company is contingently liable, have been
properly recorded or disclosed in accordance with U.S. GAAP.
12. The Company believes the assumptions and estimates used to value the provision for transaction
losses to be complete and accurate.
13. We acknowledge the customer funds payable recorded on the balance sheet as of December 31,
2020 is complete and accurate.
14. We acknowledge the token indemnity customer deposit recorded on the balance sheet as of
December 31, 2020 is complete and accurate.
15. We acknowledge the related paity note payable recorded on the balance as of December 3 1, 2020
is complete and properly disclosed in accordance with U.S. GAAP.
16. We have provided to you all documents related to the Company's equity transactions. We confirm
to the best of our knowledge and belief, that all transactions were properly recorded and disclosed
in accordance with U.S. GAAP.
17. We agree all common stock and preferred stock outstanding as of December 31, 2020 is complete
and accurate.
PDF Page 11
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 10 of 14
18. We are in agreement with the adjusting journal entries you have proposed. All audit adjustments
proposed by you have been posted to the Company's accounts.
19. We acknowledge that prior to you performing the following nonattest services:
a
Assistance with the preparation of the consolidated financial statements and related footnotes
That we understood that in order for you to maintain your independence, we must assume all
management responsibilities for the nonattest services. Including designating a qualified
individual with suitable skill, knowledge, or experience, from our senior management to
oversee the nonattest services, evaluate the adequacy and results of the nonattest services, and
accept responsibility for them. Therefore, we assigned Josh Sroge, CFO, and Elaine Stone,
Finance Manager, to oversee and evaluate the adequacy and results of the nonattest services
and they have accepted responsibility for them.
Information Provided
20. We have provided you with:
a
Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the consolidated financial statements, such as records, documentation, and
other matters.
b
Additional infonnation that you have requested from us for the purpose of the audit.
c
Unrestricted access to persons within the Company from whom you determined it necessary
to obtain audit evidence.
21. All material transactions have been recorded in the accounting records and are reflected in the
consolidated financial statements.
22. We have disclosed to you the results of our assessment of the risk that the consolidated financial
statements may be materially misstated as a result of fraud.
23 . We have no knowledge of any fraud or suspected fraud that affects the Company and involves:
a
Management,
b
Employees who have significant roles in internal control, or
c
Others where the fraud could have a material effect on the consolidated financial statements.
24. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company's
consolidated financial statements communicated by employees, former employees, analysts,
regulators, or others.
PDF Page 12
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 11 of 14
25. We have disclosed to you all known instances of noncompliance or suspected noncompliance with
laws and regulations whose effects should be considered when preparing consolidated financial
statements.
26. We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the consolidated financial statements.
27. We have disclosed to you the identity of the Company's related parties and all the related party
relationships and transactions of which we are aware.
28. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed in the notes to the
consolidated financial statements.
29. We believe the reports generated from our system used to support the digital asset balances and
transactions are complete and accurate, including both market and cost basis.
30. We believe our accounting for digital assets and financial statements disclosures are complete and
accurate.
3 1. We confirm, through our Wallet Custody Agreement with Binance Holdings Limited (BHL), the
Company has right of ownership of all corporate digital assets and right of control over all
custodial digital assets.
32. We are not aware of any security breach, corruption, destrnction or loss of private keys that would
prevent our custodian, BHL, from exerting control over any digital wallet holding either corporate
or custodial digital assets held on our behalf.
33. The Company believes there are no contingent liabilities or grounds for compensation owed to any
customers as it relates to non-supported forked assets and airdrops.
34. We do not have (a) asserted and unsettled income tax contingencies, or (b) unasserted income tax
contingencies caused by uncertain tax positions taken in our income tax returns filed with the
Internal Revenue Service and state, and local tax authorities that are probable of assertion by such
tax authorities under the provisions of ASC 450. Furthermore, we have not received either written
or oral tax opinions that are contrary to our assessment.
35. We acknowledge the customer custodial cash deposits recorded on the consolidated balance sheet
as of December 31 , 2020 is complete and accurate.
36. The Company acknowledges that prior to listing a digital asset, the Company evaluates the digital
assets for viability of the digital asset's use-cases, protocol security, and compliance with all local
laws and regulations.
37. We confirm that expenses incurred or obligations due for services between the Company and BHL
under any of its arrangements with BHL, including the Software License Agreement, Master
Services Agreement, Trademark License Agreement and Wallet Custody Agreement are properly
recorded and disclosed as of and for the year ended December 31, 2020.
PDF Page 13
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 12 of 14
38. Revenue from contracts with customers has been appropriately accounted for and disclosed in
accordance with FASB Accounting Standards codification Topic 606, Revenue from Contracts
with Customers. All revenue transactions represent valid transactions with our customers. All
contracts with underlying revenue recognized in the financial statements have commercial
substance and have been approved by appropriate parties, and we have considered side
agreements, implied promises, and unstated business conventions in identifying performance
obligations in the contracts. We have sufficient and appropriate documentation supporting all
estimates and judgments underlying the amount and timing of revenue recognized in the financial
statements. We believe the revenue recognized during the year ended December 31, 2020 is
complete and accurate.
39. The Company recorded and prepared transfer pricing documentation related to the intercompany
transaction(s) between the U.S., foreign owners, affiliates and related parties following the
requirements addressed in Internal Revenue Code Sections 482 and 6662, and associated
regulations before the timely filing of the Company's 2019 federal income tax return. The
Company will reflect the impact of any transfer pricing adjustment in its financial statements
thereafter. The Company will document the transfer pricing arrangement with its U.S.
subsidiary(s) following the requirements addressed in Internal Revenue Code Sections 482 and
6662 and associated regulations. The Company will reflect the impact of any transfer pricing
adjustment in the subsidiary's separate financial statement. Related to it's 2020 income tax
return(s) the Company will:
a
File consolidated U.S. corporation income tax return for the year ended December 31 , 2020,
on or before the extended due date of the return;
b
The U.S. subsidiaries will authorize its parent corporation to include it in a consolidated
return filing for the same period by signing Form 1122, Authorization and Consent of
Subsidiary Corporation to be Included in a consolidated income tax return filing;
c
Timely file 7004, Application for Automatic Extension of Time To File Certain Business
Income Tax, to include all wholly-owned U.S. subsidiaries;
d
Report any foreign (affiliate) monetary and nonmonetary transactions, including but not
limited to intercompany transactions, payments and relevant nonmonetary transactions with
its related parties on Forms 5472, Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business;
e
Schedule UTP, Uncertain Tax Position Statement; and
40. We have adequately considered the impact of COVID-19 pandemic and determined that we are
not aware of any specific event or circumstance that would require an update to our estimates or
judgments or a revision of the carrying value of our assets or liabilities. We have disclosed to you
all impact on our business and operations of the current COVID-19 pandemic of which we are
aware.
41. We received a term note through the Paycheck Protection Program ("PPP Loan") under the
Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). We repaid the loan with
interest during the year ended December 31, 2020 and the terms of the proceeds and repayment
have been properly presented in the consolidated financial statements.
PDF Page 14
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 13 of 14
42. Except as disclosed in the footnotes to the financial statements, no events have occurred
subsequent to the balance sheet date and through the date of this letter that would require
adjustment to, or disclosure in, the consolidated financial statements.
Ca~
r l , 2021 05:25 GMT+4)
Catherine Coley, CEO
Josh Sroge, CFO
PDF Page 15
Case 1:23-cv-01599-ABJ Document 19-8 Filed 06/06/23 Page 14 of 14
BAM Trading Services Inc. - Management Rep.
Letter - Final 3.31.2021
Final Audit Report
2021-04-01
Created:
2021-03-31
By:
Heather Moore (Heather.Moore@amllp.com)
Status:
Signed
Transaction ID:
CBJCHBCAABAAo04j9eb2VxD_woyfMVyWGV4AAGxCjQc5
"BAM Trading Services Inc. - Management Rep. Letter - Final 3.
31.2021" History
~ Document created by Heather Moore (Heather.Moore@amllp.com)
2021-03-31 - 6:26:29 PM GMT- IP address: 38.1 11.205.16
~ Document emailed to Catherine Coley (coley@binance.us) for signature
2021-03-31 - 6:27:35 PM GMT
I::. Document emailed to Joshua Sroge Uoshua.sroge@binance.us) for signature
2021 -03-31 - 6:27:35 PM GMT
~ Email viewed by Catherine Coley (coley@binance.us)
2021-03-31 - 6:27:38 PM GMT- IP address: 74.1 25.216.73
~ Email viewed by Joshua Sroge Uoshua.sroge@binance.us)
2021-03-31 - 6:27:39 PM GMT- IP address: 74.125.212.71
0o
Document e-signed by Joshua Sroge Uoshua.sroge@binance.us)
Signature Date: 2021-03-31 - 6:29:32 PM GMT - Time Source: server- IP address: 76.25.83.251
0o
Document e-signed by Catherine Coley (coley@binance.us)
Signature Date: 2021 -04-01 - 1:25:11 AM GMT - Time Source: server- IP address: 94.200.232.118
0
Agreement completed.
2021 -04-01 -1:25:11 AM GMT
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