A fraudulent Borrower could attempt to fool both Auditors and Backers into thinking they are legitimate, and then borrow capital without repaying it. The first guard against this are the Auditors, who must approve Borrowers before borrowing. Because Auditors are randomly selected, it is difficult to collude with them. The second guard are the Backers, who are highly incentivized to analyze their investments closely, since they supply higher-risk junior capital. It is likely that Backers will want to do extra research on Borrowers and potentially communicate with them directly. Lastly, Backers may sign off-chain legal contracts with Borrowers, which opens Borrowers to legal recourse.