That trick of passing around funds, just long enough to "demonstrate" that you have them to the parties looking into your reserves... is literally what the original "wildcat banks" back during the unregulated era of banking were doing: the same barrel of gold would be shown off in one bank, and then carted through the woods to the next bank before the auditors got there (and the "barrels of gold" were often just nails, with a thin layer of coins over the top, in the first place). <br><br>Even if that's not just exactly what these exchanges that pretend at being banks are doing, but on the blockchain this time, those "proof of funds" are still meaningless nothingburgers, because what they <b>aren't</b> doing simultaneously is showing "proof of liabilities": their desperate claims of "no no, look - we have all the money!" are exactly as worthless as that supposed money, because we have no idea if those "funds" that they may not even legitimately have, but are instead perhaps just passing around in a circle for long enough to capture a snapshot, would actually cover the liabilities they've incurred.<br><br>Also there's this established track record that when crypto entities make unprompted public statements about how "everything is fine" and "all of your funds are safe" to reassure their customers, that's typically the last sign you see before you hear about them going bankrupt, because they were bold-faced lying; unfortunately for the customers (or more aptly, suckers), the last feasible opportunity to escape the scam with your shirt intact is generally <b>before</b> they try to reassure you that everything is going just great, as that tends to be a thing they'll do while in the throes of their death slump.