"It could just have been a burglary, maybe a bunch 'a Knot-Tops on KT-28s"
The Knot-Tops, led by a man named Derf, are a gang in Watchmen's New York City characterized by wearing their hair in a Japanese style. They're extremely violent and responsible for attacking Dan Dreiberg and Laurie Juspeczyk in an alley whilst on their way to the home of Mason Hollis. Dan and Laurie make short work of them leaving them severely injured. The gang is also responsible for the murder of Hollis Mason on Halloween after they mistakenly believe that Mason was the Nite Owl who broke Rorschach out of prison.
KT-28s, or Katies, are a fictitional psychoactive drug in Watchmen. Later on in the novel, Dr Manhatten states that he can synthesize limitless amounts of lithium which would lead to advances in technology. Lithium is also used as a drug in psychiatric treatment and the term KT-28, which sounds more like an official pharmaceutical name, implies a legitimate drug which has somehow found its way onto the streets.