[tomjakubowski]

> What can be said about Tether: it's a trusted third party that's vulnerable to fractional reserve

What? Isn't the entire friggin point of Tether that it's _not_ a fractional reserve system?

From their own FAQ (emphasis mine):

> All tethers are pegged at one-to-one with matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by actual assets in our reserve account.

https://tether.to/faqs/

[cjbprime]

Their FAQ also promises to have audits of their USD reserves, which as I understand it they've since reneged on.

[AndrewBissell]

I think by "vulnerable to fractional reserve," he means that since there is no way to transparently verify or audit their USD reserves, they could run a fractional system while claiming to be fully backed, like Mt Gox did.

[tomjakubowski]

Ah. I guess that my reading was "vulnerable to [bank runs, due to] fractional reserve."