Its crazy how all regulation fails when it comes to the large players and participants. Bill Hwang/Archegos capital was [convicted by the SEC for insider trading](https://www.sec.gov/news/press-release/2012-2012-264htm), is also banned from participating in Hong Kong stock market for fraud, but somehow can get 5x leverage from large public banks like Nomura, Goldman Sachs and Credit Suisse. He blew up what is estimated to be a $15bn account that was extended to $80bn by leverage. Entire account gone, tanking bank stocks and profits with it. None of the banks that have been lending to him were bothered by his risky track record. And another of his proteges Teng Yue also apparently blew up a similar sized account, all trading risky Chinese stocks. The total impact is estimated at around $30bn without leverage.
These “hedge funds” were given leverage to place super risky bets on stocks. One of the company Hwang/Archegos was into, GSX Techedu has long been suspected of being a fraud company. As per some analysts and whistle blowers like Muddy Waters Research who have been calling GSX a scam for a long time, all the so called “students” of GSX are just bots, GSX was compared to another phony company Luckin Coffee. In Jan, it was suspected that the stocks rise in price was due to short covering.
[Public shareholders of GSX. Its owned by a lot of big banks, who seemingly have not done any due diligence. A lot of US public funds is used to pump shady companies. Even Pension funds are invested in this garbage.](https://preview.redd.it/wjhflelly2q61.png?width=1048&format=png&auto=webp&s=3508b609db86ba14c55d10413e9cf239d7c5189c)
These hedge funds even skip SEC reporting rules by dealing in swaps and not the actual equities of risky companies. So in this case, the SEC doesnt even know what Archegos and Teng Yue’s accounts look like, because they are all held in swaps and the banks are the final owners of these risky assets.
These risky stocks are held by pension funds and public banks on their books, while clean assets like Bitcoin are labelled risky and speculative. If the pension funds actually held bitcoin, all their pensioners would be better off and thank them. Instead they have been investing in garbage that will only erode their investors investments.