DK Profile picture
23 May, 11 tweets, 6 min read
#Tether is an unregistered, unsecured debt security.

What does that mean?

"Unregistered debt security": 1 $USDT is a promise by Tether Inc to pay you back $1 should you request it back without interest. It is, funnily enough, not unlike commerical paper.
The way that it was sold (ie promising audits that never came, pretending the assets that "back" it sit in a bank account and playing as if you had any legal claims to those assets) make it a debt security in my view and it should have had a proper prospectus.
"Unsecured": There are no assets that legally back up 1 $USDT. ZERO. You have a company that has no contract with you. They say "we will always 'peg' it to 1 $". They do not explain what this peg means. It is just an internal accounting procedure and you have to take their word.
You have no legal claims at all to the assets backing up $USDT.

So how does the system work?

Simple. The participating exchanges can request #tether if they need to replenish their inventory and give a note to Tether Inc promising them the value in USD - "commercial paper"
#Tether then pretends this commerical paper is as good as cash, but problem is, commercial paper would be traded on a secondary market like any other debt - based on the creditworthiness of the issuer. The issuer here is #binance or #FTX. So how is this commercial paper backed?
#Binance has a lot of people selling $BTC to them for $USDT as #crypto market participants are gaslighted enough to believe they are moving into "cash". So binance sees the demand for #tether increase and says to Tether Inc "Guys, I need more for future $BTC sells on my exchange"
#Tether then proceeds to mint the $USDT and sends them to #binance in exchange for a note ("Commercial Paper") where binance promises to pay #tether the USD countervalue of the $USDT received. This promise is essentially backed by all revenues of #binance and all their assets.
Given #binance will receive a lot of #crypto for the $USDT they are selling to their users, more and more of this "backing" is in #crypto, which are currenly losing value. Further, their revenues are also tied to the trading volume in #crypto. All is dependent on that market.
TL;DR: #tether is backing $USDT with unsecured (no legal claim to any specific asset) promises from exchanges to pay them $USD. These promises ("commercial paper") are backed naturally mostly by #crypto.

As long as nobody tests this backing, things are fine. It will be tested.
In any case, 1 $USDT is only a non-contractual promise by an opaque company named #Tether Inc to pay 1 USD for it. There is no legal claim to assets, there is no 1-1 backing with cash. Tether is running an investment scheme with the money & $USDT should never be stable vs $USD.
You have been warned. This is not difficult to understand.

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More from @dkcrypto13

20 May
Just wanted to make sure you are all aware of the things that could happen to #bitcoin, so you do not need to panic dump on every headline re $BTC:
- #tether could turn out to be an unregistered security, backed by unregistered securities
- tax authorities might add a carbon tax
- more and more countries will outlaw #crypto mining
- the blockchain is a fully tansparent ledger, so as crystal, chainalysis and other ramp up their tools, #dex will block addresses that involved mixing and tax authorities will know absolutely every one of your moves & tax you
- China and India will ban #bitcoin at least 8 more times
- large exchanges like Coinbase or binance will be hacked, maybe even disappear because of regulatory action in some cases
- AWS will go down and #BSC will not be reachable
- Stablecoins will be regulated
Read 4 tweets
20 May
Look guys, everything can always be a scam. But the allegations hurled @circlepay from the #tether skeptics (of which I am one) are a bit too aggressive & too early.

Ever since assets climbed above $3bn, attestations have been later and later. That is reasonable ->
Why? Because an auditor (and this is not an audit, but an auditor attesting to it) has a liability, so while it may be easy for them to attest to $400m, the current $16bn might be might more of a risk. Also $USDC is cross-chain; the larger it gets the more difficult to count ->
And yet, we are STILL within the timing of their last release (its still 8 days before it exceeds that and I'd assume it is natural that it will).

So yes - it could be another #crypto scam. It's possible. But saying a Goldman & Coinbased backed venture
Read 4 tweets
15 May
A thought on #bitcoin $BTC

Wanted to put out an article but no time. So I’ll try like this. Within my trading methodology we have left Bull market territory and are now in between. I called that consolidation in my trading article (

What does that mean?
It means that consolidations have started to drift downwards instead of up and while a return to new highs is definitely possible, it is now 50/50 that we enter a full Bear market first. We have established an early pattern of a lower high and a lower low as well.
There are strong fundamental headwinds for $BTC to consider now:

1) Inflation is showing up everywhere and the labor market seems okay in the US. New debt issuance will exceed Fed purchases for the first time in a while soon and the Fed is likely to begin looking at a taper.
Read 17 tweets
15 May
Okay, another thread on #tether.

When they announced their pie chart to the #crypto world, everyone (incl me) was like "Okay, they are backed, great - let's move on".

The thing is - I don't think we can move on actually...
I have written before ( the main issue is not that #tether is backed with something these days, but what that backing is and whether that means $USDT should trade as a stablecoin pegged 1-1 to the USD.

Their publication actually means they should not...
Let's look at their breakdown of assets and believe it without a second thought.

You can see that the #tether reserves consist of a grand total of 3.87% in actual cash. All else are instruments that any company might use to park their cash in, however there are some problems...
Read 18 tweets
26 Mar
Just thought of some #crypto personalities:
- @TheCryptoDog: The Warren Buffet of crypto. Always friendly, loves what he buys, finds value, never sells
- @AltcoinPsycho: The Jim Simons of crypto. Quant trading, options, return, but good person.
- @CryptoDonAlt: George Soros of crypto. Will speculate against the crowd, remains a good person with sound advice.
- @SalsaTekila: the Jesse Livermore of Crypto. "Colossal gains and colossal losses" sounds like his twitter feed.
- @woonomic: Ray Dalio of crypto. Best at macro.
- @edwardmorra_btc: William Gann of crypto. Purely technical analysis trading.

This was fun. I am sure there are loads of others out there.
Read 4 tweets
26 Mar
Disbelief levels as measures by leverage premium continue to look good now. In order for me to actually believe #tether is done extracting $, I want to ideally see both dotted blue lines hold on an hourly closing basis. #bitcoin

Not advice
And in a truly perfect world, someone other than Michael Saylor or Elon Musk announces they bought all the spot $BTC that left Coinbase in the last 2 days.

Larry Ellison? A friend of Elon, big Tesla stake and definitely on the crazy side of executives plus a billionaire...
So far so good. Both levels tested, both held for now 💪🏻. Not advice

Now - can we get Larry to announce please?

Read 4 tweets

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