[MrEldritch]

It's pretty obvious, actually. If you tell people you're doing it, and they still choose to give you money in exchange for the good or service you're actually performing, it cannot possibly be fraud.

Banks are very up-front about the fact that they're doing fractional reserve banking. You set up accounts in full knowledge of the fact that some of your deposit will be used for investments and that - if too many people try to withdraw the full value of their account at once - the bank may run out of reserves and you will be unable to withdraw.

Even an outright Ponzi scheme wouldn't be fraud in any moral sense if it specifically and openly said you would be investing in a Ponzi scheme and that any returns entirely depended on the extremely unlikely gamble that you would be among the first, rather than last, people to invest. (In fact, there are quite a lot of Ponzi schemes like this in cryptocurrency; at one point they made up a fairly significant proportion of all Ethereum transactions. They were treated - correctly, I think - as basically just a form of gambling for entertainment.)

And whatever your opinion of fractional reserve banking, even if you do think it's fraud you have to admit that it's clearly much less fraudulent than an outright Ponzi scheme.