Hong Kong 26-Year-Old Trader Embezzles $50 Million to Gamble on Tesla ETF, Margin Trades with Double Leverage, Loses $150 Million, Gets Arrested

July 27th - A 26-year-old trader in Hong Kong is suspected of unauthorized embezzlement of the company's 50 million Hong Kong dollars as margin. He used this fund to leverage a two-times long position on the ETF of South Southern Dongying, and ultimately suffered a paper loss of up to 150 million Hong Kong dollars due to a sharp drop in the underlying asset. The individual has been arrested by the police on suspicion of theft.

It is understood that the trader conducted the above transactions from January 9th to July 20th this year, using 50 million Hong Kong dollars as principal for margin financing, leveraging hundreds of millions of Hong Kong dollars to bet on the rise of the ETF. However, since the ETF itself is a two-times leverage product, the combination of financing leverage and ETF leverage further amplified the risk.

Public data shows that the South Southern Dongying two-times long Hailishi ETF surged to a record high of 193.65 Hong Kong dollars at the end of June, driven by the storage chip market. Subsequently, the semiconductor sector retreated, falling to 52.58 Hong Kong dollars by July 20th, with a cumulative decline of over 72%.

The positions involved in the incident have not yet been forcibly closed, and the final loss may still expand with market fluctuations. The event has attracted attention in the Central financial circle, with some related brokerage clients withdrawing funds to hedge risks.

It is reported that the involved company, Riches Asset Management Limited, is not a licensed entity by the Hong Kong Securities and Futures Commission. Riches Securities, also under the Riches Group, has issued a statement stating that the individual involved is not an employee of the firm and that the incident is unrelated to Riches Securities.