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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’ rep

• 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
  • rojeee 5y ago
    Differentiating between and audit and attestation is not pedantic but I can understand why you might think it is. I explained there difference here: https://news.ycombinator.com/item?id=27532670 https://news.ycombinator.com/item?id=27532670 TL;DR attestations do not provide a strong level of assurance and there are no standards for conducting them - they are ad hoc engagements. Audits are standardised engagements and must conform to a particular methodology to determine sufficient and appropriate evidence that financial statements are true and fair - basically you need third party info like custodian reports.
  • salawat 5y ago
    To back up numair, and help you understand a bit better, an audit in the financial regulatory sense is a highly pedantic endeavor. Accounting can be as much artform as anything else, and even amongst all the accountant's in the world, exactly how you track money and classify things is open to interpretation, and it is very easy to report some cherry picked numbers and tell a completely different story than what is going on. Independent audits do two things. They examine process, and create an environment where you have to operate in a sane manner, because your auditor can drop in at any time, pick out any particular starting point, and will expect to be able to have delivered to them where that transaction came from, and ultimately will go to based on GAAP and in house supporting process documents. This basically draws a complexity boundary around how exotic you can get within the context of one organization, because if one of the big independent auditors can't make heads or tails of you in a reasonable amount of time, it is a gigantic red flag w.r.t your operational processes. An audit also results in a snapshot of your entire cash/value flow through an organization. This is verified and cross checked for valuation by someone who doesn't know you from Adam to ensure objectivity. This is just a guarantee that the numbers add up, and over time continue to make sense. Massive discontinuities that can't be ascribed to something in the real/business world measurable by someone else are also red flags that there may be something going on there that may be valid, but you need more info to get to the bottom of it to ensure it is sound. t. Quality Assurance person who has spent entirely too much of his life digging into how finance works even though they allegedly hate it, but a statistical analysis of how much of my mind I devote to financial analysis, modeling and prediction tells another story. Ironically, if you mentally audited my thoughts you'd easily come to the conclusion I love finance. I don't. I like measuring things. Measuring finances effectively is a pain in the ass, and a perennial issue, that there are more than a few groups constantly working to frustrate people like me who try to distill truth out of account ledgers. That's why numair is absolutely right. An attestation is one slice. You know money was there. You don't know where it went afterward, which subtransactions it spawned (fees, taxes, interest accrual, etc...). That's what auditor's look at and collate. It's why it's a big deal. At the end of the day it's all arithmetic, and an audit is just having someone else run the numbers and vouching they get the same result. It's actually a little more than that, because regulation wise, the auditor's number is more reliable than yours, because they have all the incentives in place to keep their processes and interpretive liberty taking to a minimum. You want to match the auditor's numbers if you can coax your process into doing so... Of course again, there's arms race there as well. Note, auditor's don't find or investigate fraud. They just check your process is being followed, and that when someone else does it, everything works out. It just so happens that this is also a great way to shake out anything that might be used to as a basis to make fraud effectively doable. It is a rabbit hole. One that I've explored many branches of, but after a while doing it, you can pretty quickly measure how uncomfortable a group is by their level of nervousness around letting an auditor drive.