A 26-year-old Hong Kong Trader Misappropriates $50 Million to Bet on Tesla ETF, Margin Trading with Double Leverage, Loses $150 Million, and Gets Arrested

BlockBeats News, July 27th: A 26-year-old trader in Hong Kong is suspected of unauthorized embezzlement of company funds amounting to 50 million Hong Kong dollars as margin, leveraging up to two times long on the Southern Glory ETF, which ultimately resulted in 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 of principal combined with margin financing to leverage up to bet on the rise of Southern Glory. However, as the ETF itself is a double-leveraged product, the combination of financing leverage and ETF leverage further amplified the risk.

Public data shows that the Southern Glory ETF, leveraged up to two times long, surged to a record high of 193.65 Hong Kong dollars by the end of June, driven by the chip market. Subsequently, the semiconductor sector experienced a pullback, 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 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 relevant brokerage clients withdrawing funds to hedge against risks.

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