13 ms·

> Gemini has GUSD, Coinbase has USDC, Binance has BUSD, all of which claim to be fully backed by USD and have audits to bolster that claim. Congratulations! Yo

by numair 5y ago

> Gemini has GUSD, Coinbase has USDC, Binance has BUSD, all of which claim to be fully backed by USD and have audits to bolster that claim. Congratulations! You’ve just fallen into the rabbit hole of trying to find actual auditors’ reports that back up your statement. Please note that “attestations” don’t count, and that cash held in bank accounts aren’t proof of reserves that are specifically used for 1-to-1 parity unless backed by certified auditors’ statements that this pool is not also being used for, say, I don’t know, a merchant bank operating on top of crypto, or something..

anon9001 5y ago
I don't know how you can say attestations by CPAs and LLPs don't count. These offerings are pretty transparent. If you choose to use a stablecoin that's not backed by on-chain collateral, you're accepting the attestations are true and putting trust in the reputation of the companies. Personally, I'd rather be able to verify the collateral on-chain, which is why I think fully collateral-backed on-chain stablecoins like DAI make a lot of sense.
- numair 5y ago
  Do you know what an attestation actually is? Are you aware of the complete lack of accountability, liability, anything from these reports? They literally just mean “I saw some money in an account and it matched the figure they said they were supposed to have.” That’s it. As of 12:00pm on a Friday you could have your friend wire you $1B and get someone to attest that they saw $1B in your bank account, which is then wired back out; does that make you a billionaire? The willingness of these operators to target poor, unsuspecting muppets who aren’t aware that attestation ≠ audit, without any disclaimer or explanation of this fact, is a HUGE red flag that their claims of “transparency” are anything but.
  - anon9001 5y ago
    Yes, I understand, but the businesses involved in this also have a strong desire to not become insolvent. I think it's very reasonable to accept that you're mostly betting on Gemini (or whoever) being an honest broker, and the attestation reports give some reason to believe that they can produce the dollars on demand. The attestation reports do show that they're able to come up with that available balance, even if only for a minute, which does add credibility. If you're concerned about the solvency of the institutions offering these products, that's fine, but I think everyone (including Tether) is incentivized to do everything possible to never become insolvent. Aligned interests do count for something.
    - numair 5y ago
      Please choose between one of these options: 1) You retract your claim that the stablecoins you listed have audited reserves. 2) You’ve found the auditors’ reports and we all get some excellent reading material for the weekend. Your theories of crypto monetary policy are completely irrelevant within the context of a regulatory conversation. Which, by the way, is the problem the entire crypto community will have — if the hammer ever drops (which may never happen due to intense lobbying pressure by VCs and Big Crypto), the regulator won’t have any patience for any of the various theories about “the future of money” etc. Answer basic questions about audits or admit you’ve got a problem.
      - anon9001 5y ago
        I suppose I'll take option #1, if we're saying that "attestations" are not a form of auditing. It seems pedantic to me, but maybe your usage is correct in the regulatory/accounting world. To use GUSD as an example, this is the document in question: https://assets.ctfassets.net/jg6lo9a2ukvr/4HRkKKmHejTvQ32jfv8d5E/0962b89806ff27e40b695a97ac64fcb2/Gemini_Dollar_Examination_Report_05-28-21.pdf https://assets.ctfassets.net/jg6lo9a2ukvr/4HRkKKmHejTvQ32jfv... It is not a full audit of the entire history of the movement of the funds. I agree that having a full trace of every penny publicly available would increase trust in GUSD. I suspect that if you're an exchange partner with Gemini, you could ask for more visibility into how the funds are actually being allocated when they're not being summoned for attestation. Keep in mind that the risk here is insolvency, and the firms best suited to evaluate that risk are also the ones holding large amount of GUSD. I don't know if regulation would be helpful here or not. I think exchanges considering holding GUSD should accept the risk of possible insolvency, and adjust their business to account for that risk, perhaps by buying insurance.
        numair 5y ago
        > option #1 Great! So you agree that your claim that these stablecoins have audited reserves was false, and you retract it. Pleasure doing business. Since you were a good sport about this, I’ll say that I agree that Gemini is one of the better participants in that market. That being said, I’ll leave you with the notice on page 4 of your linked document, which is the only relevant passage for legal/regulatory purposes: This Information Has Not Been Examined by the Company’s Independent Accountant
  - EMM_386 5y ago
    > As of 12:00pm on a Friday you could have your friend wire you $1B and get someone to attest that they saw $1B in your bank account, which is then wired back out; does that make you a billionaire? This is literally what happened. https://davidgerard.co.uk/blockchain/2021/03/30/tether-produces-a-new-attestation-it-says-nothing-useful/ https://davidgerard.co.uk/blockchain/2021/03/30/tether-produ...
- ac29 5y ago
  > Personally, I'd rather be able to verify the collateral on-chain, which is why I think fully collateral-backed on-chain stablecoins like DAI make a lot of sense. The problem with DAI is that it is backed in large part by other stablecoins such as USDC and BUSD that are not transparent in their holdings. For example, USDC has an unknown amount of their backing in unspecified "approved investments" (language copied from the latest attestation). These investments could be boring, stable, liquid assets like US treasury bills, or they could be risky, unstable, illiquid assets, like loans to cryptocurrency exchanges. Without knowing what they are, its hard to determine how backed USDC truly is.
ansible 5y ago
Can't you also pull tricks like moving a bunch of cash into one account, getting the balance printed out, moving that cash into another account, getting that balance printed out, rinse, repeat? Where a full-on legit audit would take a snapshot of all the finances including debts, AR and AP.
fallingknife 5y ago
Here are the actual monthly auditors reports for USDC https://www.centre.io/usdc-transparency https://www.centre.io/usdc-transparency
- xur17 5y ago
  And GUSD https://www.gemini.com/dollar https://www.gemini.com/dollar
- numair 5y ago
  Here we go again. 1. Attestations are not audited financials. 2. Do not cite attestations when asked to produce audited statements, which carry specific legal and regulatory burden. 3. When others provide you with attestations when you ask for audited statements, ask them what they’re so afraid of. Especially when they’ve raised hundreds of millions of dollars and could easily pay to have some of the mid-level kids at their accounting firm on retainer to have them produce a daily audited financial report if they really wanted. 4. Following on 3, attestations are the stablecoin equivalent of what “non-GAAP earnings” were for late 1990s dotcom stocks before they blew up. Please, please, PLEASE stop scamming people who ask for audited financials with lousy attestations! You are not helping to make stablecoins look stable and trustworthy, at the very moment when everyone’s looking for a reason to shut them down! (Disclosure: I think stablecoin technology is SUPER important and I would like to make sure it isn’t killed like the Concorde by a bunch of casino owners hiding under the guise of “fintech”)
  - fallingknife 5y ago
    Audited financials are for operating companies. I don't think the concept makes sense for a cash backed stablecoin.
    - yifanl 5y ago
      If you wish to redefine these terms, then ideally do so at the start of the thread and not after providing a potentially misleading link for users who may not be familiar with which terms you're using.
deleted 5y ago
[deleted]

by numair 5y ago

anon9001 5y ago

I don't know how you can say attestations by CPAs and LLPs don't count. These offerings are pretty transparent. If you choose to use a stablecoin that's not backed by on-chain collateral, you're accepting the attestations are true and putting trust in the reputation of the companies. Personally, I'd rather be able to verify the collateral on-chain, which is why I think fully collateral-backed on-chain stablecoins like DAI make a lot of sense.

numair 5y ago
Do you know what an attestation actually is? Are you aware of the complete lack of accountability, liability, anything from these reports? They literally just mean “I saw some money in an account and it matched the figure they said they were supposed to have.” That’s it. As of 12:00pm on a Friday you could have your friend wire you $1B and get someone to attest that they saw $1B in your bank account, which is then wired back out; does that make you a billionaire? The willingness of these operators to target poor, unsuspecting muppets who aren’t aware that attestation ≠ audit, without any disclaimer or explanation of this fact, is a HUGE red flag that their claims of “transparency” are anything but.
- anon9001 5y ago
  Yes, I understand, but the businesses involved in this also have a strong desire to not become insolvent. I think it's very reasonable to accept that you're mostly betting on Gemini (or whoever) being an honest broker, and the attestation reports give some reason to believe that they can produce the dollars on demand. The attestation reports do show that they're able to come up with that available balance, even if only for a minute, which does add credibility. If you're concerned about the solvency of the institutions offering these products, that's fine, but I think everyone (including Tether) is incentivized to do everything possible to never become insolvent. Aligned interests do count for something.
  - numair 5y ago
    Please choose between one of these options: 1) You retract your claim that the stablecoins you listed have audited reserves. 2) You’ve found the auditors’ reports and we all get some excellent reading material for the weekend. Your theories of crypto monetary policy are completely irrelevant within the context of a regulatory conversation. Which, by the way, is the problem the entire crypto community will have — if the hammer ever drops (which may never happen due to intense lobbying pressure by VCs and Big Crypto), the regulator won’t have any patience for any of the various theories about “the future of money” etc. Answer basic questions about audits or admit you’ve got a problem.
    - anon9001 5y ago
      I suppose I'll take option #1, if we're saying that "attestations" are not a form of auditing. It seems pedantic to me, but maybe your usage is correct in the regulatory/accounting world. To use GUSD as an example, this is the document in question: https://assets.ctfassets.net/jg6lo9a2ukvr/4HRkKKmHejTvQ32jfv8d5E/0962b89806ff27e40b695a97ac64fcb2/Gemini_Dollar_Examination_Report_05-28-21.pdf https://assets.ctfassets.net/jg6lo9a2ukvr/4HRkKKmHejTvQ32jfv... It is not a full audit of the entire history of the movement of the funds. I agree that having a full trace of every penny publicly available would increase trust in GUSD. I suspect that if you're an exchange partner with Gemini, you could ask for more visibility into how the funds are actually being allocated when they're not being summoned for attestation. Keep in mind that the risk here is insolvency, and the firms best suited to evaluate that risk are also the ones holding large amount of GUSD. I don't know if regulation would be helpful here or not. I think exchanges considering holding GUSD should accept the risk of possible insolvency, and adjust their business to account for that risk, perhaps by buying insurance.
      - numair 5y ago
        > option #1 Great! So you agree that your claim that these stablecoins have audited reserves was false, and you retract it. Pleasure doing business. Since you were a good sport about this, I’ll say that I agree that Gemini is one of the better participants in that market. That being said, I’ll leave you with the notice on page 4 of your linked document, which is the only relevant passage for legal/regulatory purposes: This Information Has Not Been Examined by the Company’s Independent Accountant
- EMM_386 5y ago
  > As of 12:00pm on a Friday you could have your friend wire you $1B and get someone to attest that they saw $1B in your bank account, which is then wired back out; does that make you a billionaire? This is literally what happened. https://davidgerard.co.uk/blockchain/2021/03/30/tether-produces-a-new-attestation-it-says-nothing-useful/ https://davidgerard.co.uk/blockchain/2021/03/30/tether-produ...
ac29 5y ago
> Personally, I'd rather be able to verify the collateral on-chain, which is why I think fully collateral-backed on-chain stablecoins like DAI make a lot of sense. The problem with DAI is that it is backed in large part by other stablecoins such as USDC and BUSD that are not transparent in their holdings. For example, USDC has an unknown amount of their backing in unspecified "approved investments" (language copied from the latest attestation). These investments could be boring, stable, liquid assets like US treasury bills, or they could be risky, unstable, illiquid assets, like loans to cryptocurrency exchanges. Without knowing what they are, its hard to determine how backed USDC truly is.

ansible 5y ago

Can't you also pull tricks like moving a bunch of cash into one account, getting the balance printed out, moving that cash into another account, getting that balance printed out, rinse, repeat? Where a full-on legit audit would take a snapshot of all the finances including debts, AR and AP.

fallingknife 5y ago

Here are the actual monthly auditors reports for USDC https://www.centre.io/usdc-transparency https://www.centre.io/usdc-transparency

xur17 5y ago
And GUSD https://www.gemini.com/dollar https://www.gemini.com/dollar
numair 5y ago
Here we go again. 1. Attestations are not audited financials. 2. Do not cite attestations when asked to produce audited statements, which carry specific legal and regulatory burden. 3. When others provide you with attestations when you ask for audited statements, ask them what they’re so afraid of. Especially when they’ve raised hundreds of millions of dollars and could easily pay to have some of the mid-level kids at their accounting firm on retainer to have them produce a daily audited financial report if they really wanted. 4. Following on 3, attestations are the stablecoin equivalent of what “non-GAAP earnings” were for late 1990s dotcom stocks before they blew up. Please, please, PLEASE stop scamming people who ask for audited financials with lousy attestations! You are not helping to make stablecoins look stable and trustworthy, at the very moment when everyone’s looking for a reason to shut them down! (Disclosure: I think stablecoin technology is SUPER important and I would like to make sure it isn’t killed like the Concorde by a bunch of casino owners hiding under the guise of “fintech”)
- fallingknife 5y ago
  Audited financials are for operating companies. I don't think the concept makes sense for a cash backed stablecoin.
  - yifanl 5y ago
    If you wish to redefine these terms, then ideally do so at the start of the thread and not after providing a potentially misleading link for users who may not be familiar with which terms you're using.

deleted 5y ago

[deleted]