Curriculum·Graduate·G803
Custody, Attestation, and the Off-Chain Link
The Qingdao port metals fraud, 2014. At the port of Qingdao in China, a trading company used warehouse receipts, documents certifying that specific metal, copper and aluminum, was held in a warehouse, to borrow money, and it pledged the same metal to multiple lenders at once, and in cases the metal was not there in the quantities the receipts claimed.
Lesson 1 opens on
The Qingdao port metals fraud, 2014
At the port of Qingdao in China, a metals trading company used warehouse receipts, documents certifying that specific quantities of copper, aluminum and other metal were held in a warehouse, to raise money, and Chinese authorities investigated whether it had used fake warehouse receipts to obtain multiple loans secured against a single cargo of metal, pledging the same metal to several lenders at once. In some cases the metal in the warehouse was not there in the quantities the receipts claimed.58 billion dollars).
The lessons
- G803-01The token is a receipt for an off-chain assetExplain that a tokenized asset's token is a receipt whose worth depends on the off-chain asset being real and uniquely pledgedabout 33 min · opens on The Qingdao port metals fraud, 2014
- G803-02Custodian selection: who actually holds the assetExplain why the custodian of a tokenized asset must be independent of the sponsorabout 33 min · opens on Stanford International Bank, 2009
- G803-03Attestation: proving the asset is there, and pledged onceExplain that an attestation is only as good as the rigor of what it actually verifiesabout 33 min · opens on The salad-oil swindle, 1963
- G803-04Transfer agent and registry: one record, on-chain and offExplain that ownership must live in one authoritative record, or it becomes unprovableabout 34 min · opens on MERS and the foreclosure crisis, 2007 to 2012