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Patrick Tan Profile picture
@Patrick_TanKT
Apr 25 • 5 tweets • 2 min read Twitter logo Read on Twitter
1. Sadly the experience of #crypto investors in the likes of #Celsius and #BlockFi is similar to what could have happened to depositors at $SBNY, $SI and $SIVB.

bloomberg.com/news/articles/…
2. Most investors/depositors don't realize that when you deposit money with a bank or anything that looks on the surface to behave like a bank, all you have is an unsecured claim against that entity.
3. Banks at least have FDIC-insured deposits up to $250,000, but "crypto banks" look like banks, behave like banks, but are not banks.
4. The hodgepodge of existing regulations also don't provide a comprehensive framework that protects crypto investors and entities claiming they're "regulated" and/or "compliant" often have licenses for entirely unrelated activities in lax jurisdictions.
5. "Sadly" I don't think the current size of losses is sufficiently large for Congress to act (not enough people were whacked for it to become a political issue that a campaign can be built on) and so many will be left hanging.

Maybe next time?

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More from @Patrick_TanKT

Patrick Tan Profile picture
Apr 27
Why aren't there so many, songs about crypto,
and what's on the other side?
Crypto's a vision, but only illusion,
cause crypto's got plenty to hide.
So we've been told and some choose to believe it
I know they're wrong wait and see.
Someday we'll find it, the Crypto Connection,
the fraudsters, the grifters and me.
Who said that every pump would be heard and answered, when wished on a Twitter rant?
Somebody thought of that
and someone then tweeted,
and look what it's done so far.
Read 7 tweets
Patrick Tan Profile picture
Apr 27
Ah yes, @coinbase's Writ of Mandamus against the @SECGov.

Now because we can't all have gone to the University of American Samoa's fine Law School, here's what it means...

assets.ctfassets.net/c5bd0wqjc7v0/5…
1. Requesting a Writ of Mandamus from the U.S. Court of Appeals against the SEC is a bit like telling your principal to tell your homeroom teacher to "do their job."
2. Here's what Wikipedia says,

Mandamus is a judicial remedy in the form of an order from a court to any government, subordinate court, corporation, or public authority, to do some specific act which that body is obliged under law to do.
Read 17 tweets
Patrick Tan Profile picture
Apr 25
1. Can a #stablecoin ever be a #security?

law.asia/stablecoin-sec…
2. I argue that even if #stablecoins do not perfectly satisfy the four prongs of the by now familiar Howey Test for securities, established by the U.S. Supreme Court, substance should not be sacrificed for form.
3. Ultimately a court of competent jurisdiction may be more minded to classify stablecoins as securities given the ultimate goal is investor protection.
Read 4 tweets
Patrick Tan Profile picture
Mar 25
Short sellers get a rough time because the psychology of the market is more often than not, unbridled optimism.

Yet their essential role in the market cannot be overstated.

The business model is simple.

Research the heck out of companies that appear too good to be true.
If management was 100% honest, 100% of the time, we wouldn't need auditors.

If auditors were 100% accurate, 100% of the time, we wouldn't need short sellers.

Ergo, short sellers play an indispensable role in a properly functioning market.
Once fraud and/or misrepresentation has been detected, the short seller starts silently stalking its prey, building up short positions quietly so as not to startle its target or attract other hunters.
Read 10 tweets
Patrick Tan Profile picture
Mar 24
Remember Abraaj? The Abraaj Group was the PE industry's biggest scandal, lighting billions of dollars in investor's monies on fire and embroiling the Gates Foundation and some of the biggest investors globally in what was essentially a confidence scam.

A 🧵...(1/20)
Full credit to @william_louch and @ClarkWriting on their outstanding book #TheKeyMan which is a must read for any investor, especially those who tend to be swayed by appearances.

Below is a non-affiliate link. (2/20)

amzn.asia/d/3iDxOER
Arif Naqvi started his private equity firm Abraaj promising investors the opportunity to do good in the emerging markets, while making a tidy profit at the same time.

Because who doesn't want to feel good about being rich?

(3/20)
Read 20 tweets
Patrick Tan Profile picture
Feb 13
What if $BUSD as a security was a red herring all along?

Stay with me for a minute.

Looking at the case law, unless there are facts we are unaware of, it would be very challenging and nothing short of legal gymnastics to even attempt to argue $BUSD on Paxos is a security.
The caselaw can be found here. Everyone is looking at the Howey Test, but the real meat of the matter is likely to be covered by a different case Reves Et Al. v. Ernst & Young found here:

scholar.google.com.sg/scholar_case?c…
But bear in mind, a Wells notice is merely a formal letter informing the recipient of an intention to litigate and providing an opportunity for the respondent to provide cause as to why the @SECGov should not proceed.
Read 10 tweets

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