May 12, 2022

🥛 The one move we made yesterday

GM. This is the Milk Road, we cover the wild world of crypto like a toupee covers your uncles shiny bald head.

Here's what we got today:

Estimated read time: 2 minutes and 56 seconds

  • 💸 Tax loss harvesting

  • ⚖️ An attack on stablecoins

  • 🥛 Milk Road Mythbusters: Did Citadel attack UST?

  • 🤣 Meme of the Day


Ladies and gents, we are witnessing one of the nastiest crypto crashes ever. Stablecoins are failing, ETH is at $2k, and Bitcoin under $30k.

Maximum pain.

These are the days when you put the phone in the drawer and go outside to pretend you enjoy nature.

There is, however, a teeny tiny silver lining: Tax Loss Harvesting.

Let’s say you are bullish long-term on ETH, but it’s experiencing a dip right now.

You own 10 ETH that you bought at $4,000, and today it’s at $2,000 (just using round numbers).

You can swap that 10 ETH for a neutral asset (like wETH or USDC) on Uniswap.

This counts as “selling” your ETH, which books a 50% loss (10 x $2000 = $20,000 loss) for tax purposes.

Then you can swap the USDC right back for ETH, and you’re back to your original holdings (10Eth) but with a tax loss, you can use this year against other income. Tax losses are great for offsetting other taxable “gains.”

Notice I put gains in quotes.

Because right now – the stock market is crashing, the crypto market is crashing, hell even the farmers market is probably crashing. So I’m sticking “gains” in air quotes because it feels like I’m talking about “healing crystals” right now.

Wait, you can get a tax loss by selling it and buying it right back? Is that legal?

With stocks, you can’t immediately sell and re-buy to get the tax savings. You have to wait at least 30 days (known as ‘wash trading rules’)

But for crypto, there’s no 30-day rule. Call it a loophole. Call it an oversight. Call it my grandma for all I care. It’s great.

Are there any downsides?

Of course. Rule #98 of the Milk Road: free lunches ain’t free.

Here are a few of the downsides:

  • Your new tax basis is lower, so in the future if ETH runs way up and you sell, you’ll have a bigger taxable gain in the future

  • Each swap has gas fees, so you’ll spend ~$50-100 doing the swap

  • The IRS may change the rules in the future (and if they’re feeling grumpy, they might retroactively apply them)

  • Doing this requires looking at crypto prices, which causes internal agony these days.


We just saw UST crash faster than anything we’ve ever seen before over the last few days.

It was the fastest-growing stablecoin and had a lot of eyes on it because of how big it got.

Because of that, a number of other chains tried copying it. The most recent was Tron, who recently released their stablecoin – USDD and NEAR is launching one too – USN.

Since UST got wrecked and short-sellers made a fortune, people are wondering if the other stablecoins will get hit too.

So, is USDD next? Yesterday we saw it depeg and drop to $0.98. Doesn’t sound like a lot, but remember the crash of UST started out the same.

The real systemic risk here is Tether, a stablecoin backed by real assets, that's the third-largest token by market cap. It suffered the largest drop in over 2 years yesterday – briefly dropping to $0.95.

Milk Road Take: When it rains, it pours. And it’s pouring on stablecoins. UST was first and now all the other stablecoins might be targeted next.


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Welcome back to another segment of the Milkbusters – where we debunk common narratives.

This time we’re gonna talk about who was the one behind the attack on UST over the last few days. Aka who are the ones that caused things to spiral out of control?

Myth: Citadel was behind the attack on UST

This rumor was spreading around cryptoland over the last few days. We even thought the juicy rumor was real.

Well, we’re here to tell you the facts… Citadel is not the attacker.

How do we know? They told us directly.

We received this email yesterday:

Hi Shaan – saw your newsletter today. Can you please include our statement:

Citadel Securities does not trade stablecoins, including UST.”

Thank you.

Naturally we wanted to dig a little deeper. We responded:

There is some speculation that Citadel was involved. Either as a market maker, lender, or active participant in large trades that led to UST’s collapse.

On Twitter, many believe the statement: “Citadel Securities does not trade stablecoins, including UST” is carefully worded.

I’m sure Twitter paranoia is an endless rabbit hole but perhaps it would help: Do you want to extend the clarification to say that: neither Citadel, Citadel Securities, nor Ken Griffin, were actively involved as a market maker, lender, or short-seller in the UST collapse?

His response:

We were in no way involved. You can put that on the record attributed to me if you like.

Blackrock has said the same, and Gemini made a similar comment.

In the future you can check anything you like with me directly.

There you have it – and look at the cajones on this guy to tell us this:


Shaan aka “Elon’s chocolate milk” & Ben "2% Milk" Levy

See ya tomorrow!

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None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.