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I think I’ll just link to my comment from a past thread on this topic: https://news.ycombinator.com/item?id=27640730 https://news.ycombinator.com/item?id=27640

by numair 5y ago

I think I’ll just link to my comment from a past thread on this topic: https://news.ycombinator.com/item?id=27640730 https://news.ycombinator.com/item?id=27640730 anon9001 was an extremely good sport about the trap they fell into, which most people do, when they don’t realize all of these “audited reports” are actually “attestations” which aren’t worth the pixels they’re rendered into. If you’re confused about why Coinbase’s move is a big deal, there’s a good place to start... It’ll be great if A16Z/Draper/etc ever come clean about all of the regulatory cowboy nonsense they’ve supported and encouraged under the “backed by leading Silicon Valley VCs” label. Which is part of why this has gone on for so long, and why so many smart people assume nobody “real” will actually pay the price for fraud/unregulated activity/etc. Based on what we are seeing in terms of prosecutions and enforcements, that seems about right. If the past is any indication, the crypto markets should actually trade higher on news of improprieties... Bizarro world we live in, with no adult supervision.

alisonkisk 5y ago
> “backed by leading Silicon Valley VCs” Why would that give people confidence? Silicon Valley business model is to make money via externalizing risk onto users or society at large.
- effingwewt 5y ago
  Don't know why this is downvoted this is absolutely true- was an article about Uber/Lyft/GH/DD et al. doing exactly this the other day. Some have said this from the beginning but been shouted doen. Same with crypto/nfts et al. In fact can someone show me something actually good that's changed the world for the better from SV VCvs?
rchaud 5y ago
There's a "fog of war" effect here created by cumulative effect of hype, relentless PR spin and the cultish belief in crypto as a salve for the world's problems. If Tether and USDC have the billions in funds that they claim to, they wouldn't hire no-name accounting firms , because those firms don't have the resources or knowledge to audit such vast amounts. An audit also puts the firm's reputation and CPA license at stake, which explains why even the no-name firms aren't committing to anything besides an attestation.
yrral 5y ago
Do you think most/all stablecoin firms went into this space thinking they would go all cowboy and skirt all regulations? Or do you think a more likely explanation is that they all went into this space trying to do it correctly and hold only USD, and maybe outdated regulations prevent them from holding just USD so they have to find a different way to do so that may not be clean enough to be auditable?
- jeromegv 5y ago
  The regulation is the regulation, this is what they have to obey. If this is not clean enough to be auditable, then may be they don't have a legit business. You seem to pass the blame to the regulation when in fact they already knew what the regulation was before they event started into this space.
- akerl_ 5y ago
  > Do you think most/all stablecoin firms went into this space thinking they would go all cowboy and skirt all regulations? Yes. As a first point of evidence: “get into a space and cowboy it up” is basically the whole SV operating procedure. See Uber, Airbnb, Tesla, etc. As a second, auditors have no problem auditing every multinational corporation and signing off that their complex shuffling of funds to utilize tax loopholes follow the letter of the law. Even people who are breaking the law can successfully be audited. If your books are so unclean that they are literally impossible to audit, it’s hard to fathom how you’re possibly operating legitimately.
- elliekelly 5y ago
  These “stablecoin” shops aren’t getting dinged by nit-picky regulators for minor compliance mistakes. They’re getting nailed for major systemic issues that often border on fraud.
- TomSwirly 5y ago
  Yes, the first one, absolutely. "We can print money, and no one will stop us"
TameAntelope 5y ago
I'm sorry, but claiming "attestations" aren't "worth the pixels they're rendered into" is a gross oversimplification and honestly, an outright lie. You clearly are trying to do a good thing here by making people aware of risk, but you are inaccurately stating that attestations aren't meaningful. This is skepticism for skepticism's sake, if you have anything real to indicate what's being claimed by stablecoin attestations isn't true or does not mean that there is $1 USD backing every attested stablecoin, please come forward with that information. Otherwise, it's wildly irresponsible to continue to say what you're saying.
- deleted 5y ago
  [deleted]
- ceejayoz 5y ago
  > I'm sorry, but claiming "attestations" aren't "worth the pixels they're rendered into" is a gross oversimplification and honestly, an outright lie. Nope. For an example of why they're useless: https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-... > In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’ > On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account.
  - TameAntelope 5y ago

by numair 5y ago

alisonkisk 5y ago

> “backed by leading Silicon Valley VCs” Why would that give people confidence? Silicon Valley business model is to make money via externalizing risk onto users or society at large.

effingwewt 5y ago
Don't know why this is downvoted this is absolutely true- was an article about Uber/Lyft/GH/DD et al. doing exactly this the other day. Some have said this from the beginning but been shouted doen. Same with crypto/nfts et al. In fact can someone show me something actually good that's changed the world for the better from SV VCvs?

rchaud 5y ago

There's a "fog of war" effect here created by cumulative effect of hype, relentless PR spin and the cultish belief in crypto as a salve for the world's problems. If Tether and USDC have the billions in funds that they claim to, they wouldn't hire no-name accounting firms , because those firms don't have the resources or knowledge to audit such vast amounts. An audit also puts the firm's reputation and CPA license at stake, which explains why even the no-name firms aren't committing to anything besides an attestation.

yrral 5y ago

Do you think most/all stablecoin firms went into this space thinking they would go all cowboy and skirt all regulations? Or do you think a more likely explanation is that they all went into this space trying to do it correctly and hold only USD, and maybe outdated regulations prevent them from holding just USD so they have to find a different way to do so that may not be clean enough to be auditable?

jeromegv 5y ago
The regulation is the regulation, this is what they have to obey. If this is not clean enough to be auditable, then may be they don't have a legit business. You seem to pass the blame to the regulation when in fact they already knew what the regulation was before they event started into this space.
akerl_ 5y ago
> Do you think most/all stablecoin firms went into this space thinking they would go all cowboy and skirt all regulations? Yes. As a first point of evidence: “get into a space and cowboy it up” is basically the whole SV operating procedure. See Uber, Airbnb, Tesla, etc. As a second, auditors have no problem auditing every multinational corporation and signing off that their complex shuffling of funds to utilize tax loopholes follow the letter of the law. Even people who are breaking the law can successfully be audited. If your books are so unclean that they are literally impossible to audit, it’s hard to fathom how you’re possibly operating legitimately.
elliekelly 5y ago
These “stablecoin” shops aren’t getting dinged by nit-picky regulators for minor compliance mistakes. They’re getting nailed for major systemic issues that often border on fraud.
TomSwirly 5y ago
Yes, the first one, absolutely. "We can print money, and no one will stop us"

TameAntelope 5y ago

I'm sorry, but claiming "attestations" aren't "worth the pixels they're rendered into" is a gross oversimplification and honestly, an outright lie. You clearly are trying to do a good thing here by making people aware of risk, but you are inaccurately stating that attestations aren't meaningful. This is skepticism for skepticism's sake, if you have anything real to indicate what's being claimed by stablecoin attestations isn't true or does not mean that there is $1 USD backing every attested stablecoin, please come forward with that information. Otherwise, it's wildly irresponsible to continue to say what you're saying.

deleted 5y ago
[deleted]
ceejayoz 5y ago
> I'm sorry, but claiming "attestations" aren't "worth the pixels they're rendered into" is a gross oversimplification and honestly, an outright lie. Nope. For an example of why they're useless: https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-... > In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’ > On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account.
- TameAntelope 5y ago