Brian Cubellis

Chief Strategy Officer @OnrampBitcoin \\\\\\\\ Partner @Early_Riders

[Brian Cubellis @BackslashBTC]

https://t.co/xVceExgmME

[Brian Cubellis @BackslashBTC]

Reminder that we’ve been talking about DAT related risks for well over a year now.

Our recent analysis on the topic isn’t out of the ordinary or some ploy.

We wrote the STRC report because the marketing and gaslighting around DiGiTaL CrEdIt was getting insane.

[Onramp @OnrampBitcoin]

New episode of Final Settlement, out now!

Are Bitcoin Treasury Companies the New Altcoin ICOs?

We also discuss...

➤ Key deals & news of the week
➤ Bitcoin treasury company proliferation
➤ Nation-state hashrate accumulation
➤ Stablecoins, traditional banking & more!

[Brian Cubellis @BackslashBTC]

This is a perfect example of the gaslighting that @parkeralewis and others are rightly calling out around "Digital Credit" promotion.

Adam points to the words "equity credit" on a Moody's cover page and acts like that settles it. But that phrase, in the context of the actual document, means pretty much the opposite of what he wants his followers to believe.

"Equity credit" is Moody's term for how much of a hybrid instrument (ie pref equity) they treat as equity when they assess a company.

The whole document is a tool for measuring how EQUITY-like something is when it doesn't cleanly qualify as either common equity or actual credit.

Ofc, he just gave a screenshot and didn't link to the actual methodology. So let's dive in!

https://t.co/cvfJ2LULCe

Let's take STRC and run it through the methodology he's referencing.

Strategy carries a junk rating from S&P. So under Moody's own methodology, the speculative-grade test is the one that applies. And on that test, a hybrid only counts as debt if its holders can force the company into bankruptcy or hold creditor rights once it's there. If they can't do either, it counts as 100% equity.

So can STRC holders do either? No. They can't accelerate, can't trigger a default, can't force payment of a single dollar, and they sit behind every piece of debt the company has. The dividend only gets paid if the board chooses to declare it, and the stock has no maturity, so there's no principal anyone can ever demand back.

According to the document Adam shared, STRC is 100% equity, the most equity-like result the methodology can assign.

Adam frames critics as if they're quibbling over vocabulary. They aren't. Credit means the holder has real protections: a fixed date to be repaid, the right to call a default if they aren't, the right to accelerate the balance, and a creditor's standing ahead of equity if the company goes under.

Those protections are the entire substance of the word, and STRC carries none of them. You can call it credit all you want. The name doesn't change the terms.

Stop the gaslighting.

[Brian Cubellis @BackslashBTC]

@joh5452 @OnrampBitcoin Definitely. In the report we explain how it’s a step in the right direction, but the industry can do better

[Onramp @OnrampBitcoin]

Most major Bitcoin exchanges publish Proof of Reserves today.

But that did not prevent Bybit's $1.5 billion loss.

Their audited PoR was published less than 24 hours before the hack. 

The PoR was legit. The loss happened anyway. 

New Research 👇

[Michael Tanguma @MTanguma]

1/Proof of Reserves tells you the coins were there yesterday.

It doesn't tell you who can move them tomorrow. That's the gap.

Custody is not just a question of assets.

It’s a question of title, control, and what happens when something breaks.

[Brian Cubellis @BackslashBTC]

Read our full report:

The Proof of Reserves Illusion
https://t.co/SpyiapTVBG

[Brian Cubellis @BackslashBTC]

Proof of Reserves is a great step for the industry, no doubt. But it's not enough.

PoR is a point-in-time snapshot of an omnibus pool of funds.

Holders should demand more. That's the standard we've built towards with MIC at Onramp.

Proof of Ownership.
This is the way.

[Onramp @OnrampBitcoin]

Proof of reserves became the industry's response to FTX.

The largest custodial losses since then have all occurred at firms with PoR, multi-sig, or both.

The reports were accurate.

What they measure is not what determines whether your Bitcoin is safe.👇

[Brian Cubellis @BackslashBTC]

@OnrampBitcoin PoR is a snapshot of a point in time

It's a great step for the industry but doesn't provide ownership assurances or proof that your coins will be there tomorrow

Proof of ownership is what is needed, and what Multi-Institution Custody inherently provides

[Onramp @OnrampBitcoin]

Proof of reserves became the industry's response to FTX.

The largest custodial losses since then have all occurred at firms with PoR, multi-sig, or both.

The reports were accurate.

What they measure is not what determines whether your Bitcoin is safe.👇

[Parker Lewis @parkeralewis]

Calling STRC and SATA "Digital Credit" is just the tip of the gaslighting spear, but the gaslighters want to focus your energy there, myopically. To make it seem like semantics and to distract you from all the other gaslighting. That's part of the gaslighting itself (look up the definition of gaslighting). But as Brian points out, their semantics don't even work out.

Strive Management: It's digital hybrid equity credit.

Market Commentary: But it's more like equity according to the report you reference, it's perpetual/permanent, no maturity, no contractual interest, no creditor rights that can force BK, prevent subordination or otherwise. Why do you have to gaslight? Could you just stop gaslighting?

Strive Marketing: drop the hybrid equity, it's cleaner. Digital Credit.

The Party told you to reject the evidence of your eyes and ears.

[Brian Cubellis @BackslashBTC]

@cmk_hodl @MTanguma @parkeralewis Really? Been engaging in good faith pretty regularly and you have like three diff replies to all my posts for some strange reason, but didn’t reply to this

https://t.co/vmoHxpoWy7

[Brian Cubellis @BackslashBTC]

1) false, still misunderstanding what we're saying. I suggest you read the report. zero bearishness on bitcoin. 95p btc 5p strc would add counterparty, management, execution risk etc that isn't comparable to the risk of treasuries. that's the point

the structural risk of the product is not "pegged" to bitcoin doing well long term, there are certainly paths where bitcoin does great long term and strc still breaks peg, doesn't pay the div, coins get lost etc. so that assertion is just fundamentally untrue.

2) its only perceived as an "attack" to those that are unreasonably emotional and defensive about DATs. why is strategy immune to critical analysis according to you folks? no one is refuting the facts around anything we're saying, they're just upset we're saying them.

also we've been talking about the risks around DATs for close to two years now. not that they necessarily blow up tomorrow but that there are structural risks, custody being the biggest one, that are not widely discussed by market participants. so we discuss them

we do multiple podcasts a week and write a ton of newsletters and research reports, obviously if something gets topical and is gaining steam, we're more likely to talk/write about it. doesn't make it an attack or some targeted approach.

3) sounds like you don't even understand what MIC is or what our core focus is. a single entity conducting a complex multisig structure is still a single point of failure at the entity level. look at the laundry list of exchange hacks or instances of private key mismanagement over the years. guess what, they use multisig! obviously coinbase and others use multisig, what matters is unilateral entity-level control and the lack of fault tolerance, which is what MIC solves for

[Brian Cubellis @BackslashBTC]

This is a perfect example of the gaslighting that @parkeralewis and others are rightly calling out around "Digital Credit" promotion.

Adam points to the words "equity credit" on a Moody's cover page and acts like that settles it. But that phrase, in the context of the actual document, means pretty much the opposite of what he wants his followers to believe.

"Equity credit" is Moody's term for how much of a hybrid instrument (ie pref equity) they treat as equity when they assess a company.

The whole document is a tool for measuring how EQUITY-like something is when it doesn't cleanly qualify as either common equity or actual credit.

Ofc, he just gave a screenshot and didn't link to the actual methodology. So let's dive in!

https://t.co/cvfJ2LULCe

Let's take STRC and run it through the methodology he's referencing.

Strategy carries a junk rating from S&P. So under Moody's own methodology, the speculative-grade test is the one that applies. And on that test, a hybrid only counts as debt if its holders can force the company into bankruptcy or hold creditor rights once it's there. If they can't do either, it counts as 100% equity.

So can STRC holders do either? No. They can't accelerate, can't trigger a default, can't force payment of a single dollar, and they sit behind every piece of debt the company has. The dividend only gets paid if the board chooses to declare it, and the stock has no maturity, so there's no principal anyone can ever demand back.

According to the document Adam shared, STRC is 100% equity, the most equity-like result the methodology can assign.

Adam frames critics as if they're quibbling over vocabulary. They aren't. Credit means the holder has real protections: a fixed date to be repaid, the right to call a default if they aren't, the right to accelerate the balance, and a creditor's standing ahead of equity if the company goes under.

Those protections are the entire substance of the word, and STRC carries none of them. You can call it credit all you want. The name doesn't change the terms.

Stop the gaslighting.

[Brian Cubellis @BackslashBTC]

Instead of responding to this, Adam decided to block me, then subtweet me.

But what he conceded: critics are right that STRC and the rest are legally preferred equity, and holders lack maturity, acceleration, default remedies, and any ability to force repayment.

He calls that “one narrow thing.” It’s the entire thing. Those missing rights are what the word credit entails.

Analyzing preferred through a credit lens is fine. Selling it to retail as “Digital Credit” when it has none of credit’s protections is the gaslighting.

[Brian Cubellis @BackslashBTC]

This is a perfect example of the gaslighting that @parkeralewis and others are rightly calling out around "Digital Credit" promotion.

Adam points to the words "equity credit" on a Moody's cover page and acts like that settles it. But that phrase, in the context of the actual document, means pretty much the opposite of what he wants his followers to believe.

"Equity credit" is Moody's term for how much of a hybrid instrument (ie pref equity) they treat as equity when they assess a company.

The whole document is a tool for measuring how EQUITY-like something is when it doesn't cleanly qualify as either common equity or actual credit.

Ofc, he just gave a screenshot and didn't link to the actual methodology. So let's dive in!

https://t.co/cvfJ2LULCe

Let's take STRC and run it through the methodology he's referencing.

Strategy carries a junk rating from S&P. So under Moody's own methodology, the speculative-grade test is the one that applies. And on that test, a hybrid only counts as debt if its holders can force the company into bankruptcy or hold creditor rights once it's there. If they can't do either, it counts as 100% equity.

So can STRC holders do either? No. They can't accelerate, can't trigger a default, can't force payment of a single dollar, and they sit behind every piece of debt the company has. The dividend only gets paid if the board chooses to declare it, and the stock has no maturity, so there's no principal anyone can ever demand back.

According to the document Adam shared, STRC is 100% equity, the most equity-like result the methodology can assign.

Adam frames critics as if they're quibbling over vocabulary. They aren't. Credit means the holder has real protections: a fixed date to be repaid, the right to call a default if they aren't, the right to accelerate the balance, and a creditor's standing ahead of equity if the company goes under.

Those protections are the entire substance of the word, and STRC carries none of them. You can call it credit all you want. The name doesn't change the terms.

Stop the gaslighting.

[Brian Cubellis @BackslashBTC]

@cmk_hodl @MTanguma @parkeralewis Shocker

[Brian Cubellis @BackslashBTC]

@NameRandom40846 https://t.co/Vy9XXaiiBO

[Brian Cubellis @BackslashBTC]

This is a perfect example of the gaslighting that @parkeralewis and others are rightly calling out around "Digital Credit" promotion.

Adam points to the words "equity credit" on a Moody's cover page and acts like that settles it. But that phrase, in the context of the actual document, means pretty much the opposite of what he wants his followers to believe.

"Equity credit" is Moody's term for how much of a hybrid instrument (ie pref equity) they treat as equity when they assess a company.

The whole document is a tool for measuring how EQUITY-like something is when it doesn't cleanly qualify as either common equity or actual credit.

Ofc, he just gave a screenshot and didn't link to the actual methodology. So let's dive in!

https://t.co/cvfJ2LULCe

Let's take STRC and run it through the methodology he's referencing.

Strategy carries a junk rating from S&P. So under Moody's own methodology, the speculative-grade test is the one that applies. And on that test, a hybrid only counts as debt if its holders can force the company into bankruptcy or hold creditor rights once it's there. If they can't do either, it counts as 100% equity.

So can STRC holders do either? No. They can't accelerate, can't trigger a default, can't force payment of a single dollar, and they sit behind every piece of debt the company has. The dividend only gets paid if the board chooses to declare it, and the stock has no maturity, so there's no principal anyone can ever demand back.

According to the document Adam shared, STRC is 100% equity, the most equity-like result the methodology can assign.

Adam frames critics as if they're quibbling over vocabulary. They aren't. Credit means the holder has real protections: a fixed date to be repaid, the right to call a default if they aren't, the right to accelerate the balance, and a creditor's standing ahead of equity if the company goes under.

Those protections are the entire substance of the word, and STRC carries none of them. You can call it credit all you want. The name doesn't change the terms.

Stop the gaslighting.

[Brian Cubellis @BackslashBTC]

The crux of the issue with all the gaslighting from the DAT & DiGiTaL CrEdIt salesmen is that they themselves have been aggressively gaslit.

One of the most shocking responses to any critique of these instruments is “he clearly hasn’t listened to the recent earnings calls!”

[Brian Cubellis @BackslashBTC]

“He told us he’d sell bitcoin!”

“Ackshually he’s sold before!”

“He’s inoculating the market!”

“You don’t get it, it’s the iPhone moment!”

“Hundreds of trillions in trapped capital!”

All the earnings calls do is help move the goalposts. What happened to no ATM under 2.5x mnav? What happened to sell your kidney?

This is all rhetoric and marketing that they themselves have been fed, decided to believe, and are incentivized to propagate due to their bag bias. None of it answers the actual critique. It’s just gaslighting regurgitation.

[Onramp @OnrampBitcoin]

If you wanted to suppress the price of a scarce-supply asset, history already handed you the toolkit.

This week's Market Brief is not an accusation but a thought experiment and evidence review.

How much of that toolkit exists around bitcoin, and how much is being used?

🧵👇

[Brian Cubellis @BackslashBTC]

@macrojack21 The Barnapocalypse unironically has implications for bitcoin

https://t.co/MdIsEHysIZ

[Brian Cubellis @BackslashBTC]

The Barnapocalypse may be transitory but the inflation fire it’s feeding, already raging from the energy crisis and commodity shortages, will not be.

[Brian Cubellis @BackslashBTC]

The Barnapocalypse may be transitory but the inflation fire it’s feeding, already raging from the energy crisis and commodity shortages, will not be.

[Marhelm @MarhelmData]

Iranian missiles may not be the greatest threat to the ships stranded in the Persian Gulf

Unchecked barnacle growth can reduce speed / increase fuel consumption by 40-80% in extreme cases (IMO, EU CLEANSHIP)

Barnacles can even eventually...sink a ship or cause a total loss