[redcobra762]

As with most common sense, that’s completely wrong. Deceptively operating at a fractional reserve would eventually end with everyone involved losing everything and spending large portions of their remaining lives in prison.

Common sense is rarely either.

[ForHackernews]

Certainly nobody involved in cryptocurrency has ever been known to take dumb risks, lose everything, and end up rotting in prison.

[redcobra762]

Good point, let’s presume literally all of crypto is actively doing all of our worst fears, and not bother with a pesky thing like proof.

[RustyRussell]

Except we know of occasions they printed tether in return for collateral promises, rather than actually for cash. Not to mention filling a hole with Bitfinex stock when one of their processors got raided.

Now, it's just a question of degree: they're so profitable they can recover from being fractional rapidly. OTOH, why mess with a working formula?

[redcobra762]

Do we “know” that? We have evidence for it, but there’s more uncertainty than you’re letting on.

To be clear, I have zero financial interest in any crypto, I just think it’s premature to assume the worst just because of the industry.

[RustyRussell]

Yes, the NY investigation was all about this: they patched up the loss and quietly changed their terms to being backed by cash or equivalents.

And they later detailed the $1bn Tether printed for Celcius in return for collateral (once Celcius collapsed and they claimed it was fully repaid).

Understand: for modern banks this kind of fractional behaviour is considered normal. It's only from the weird Bitcoin perspective that full reserve would be a requirement.

[redcobra762]

So in other words, an investigation took place, changes were made, and Tether was allowed to continue to operate?

[ForHackernews]

>not bother with a pesky thing like proof

This is pretty hilarious coming from someone defending a company that refuses to produce a legitimate audit. (no, an "attestation" is not an audit)

If all they're doing is sitting on a giant big pile of cash and treasury bonds, it should be absolutely trivial to provide proof: here's where those assets are deposited.

[redcobra762]

If you can’t see the value in an attestation, you’re not familiar with the topic.

And I’m not “defending” anything other than the basic idea that when one has not proven something, one cannot claim it as true. Nobody has been able to prove Tether is a scam, so it isn’t.

[ForHackernews]

>Nobody has been able to prove Tether is a scam, so it isn’t.

This right here is amazingly revealing of the mindset that leads fools to become separated from their money. What's the opposite of caveat emptor?