Imagine this for a second imagine that you decided for some dumb reason that you wanted to rob a bank. You you end up making a haul of one million dollars and you get busted down on by the cops cops arrest. You you go to jail. You've got a court date in that court.

They say you know what you you robbed for a million dollars. You really messed up here you face prison for who knows how long, maybe 20 years 30 50, maybe for life, could be a long time. Well, that's what appears to be the case for blue collar americans, the lower class mid-class citizens that live in this country. However, that is not the case for what we're about to discuss here today, guys welcome to trace trades, where we freaking talk fast and don't skip class, like your professor, by saying out of five experts, so they're gon na say the greatest salt today we're gon na.

Be talking about the massive market manipulation billions of dollars, fraud that took place with rk ghosts. Rk ghost is a hedge fund that was created by bill huang, who has quite the story to tell and let's get right into the mean potatoes of this video. So, to start off, we first have to understand the background of rk ghost uh rk goes committed a fraudulence making nearly 35 billion dollars. You can see here.

This is an excerpt from a actual article that came out from the sec in which you can see the growth of this process. Utilizing a couple different tactics specifically leveraging, and what we're about to read about up here - or i should say down here, which is sbs's security-based swaps. But they managed to turn 1.6 billion dollars into 36 billion dollars in the matter of one single year by massive leveraging. By the sbs pretty incredible bill huang we got to start off with this guy.

What's his background, what did he do? How did he come to find this company in the first place this hedge fund? Well before he began with rk ghost, he actually ran a different firm, which was tiger asia. You can see tiger asia, management, llc and tiger asia partners, llc collectively tiger asia. Rk ghost was formed from the creator of these personal funds, which was bill huang bill wang in 2012, however, was actually pled guilty to criminal insider trading charges titan get down. Now.

If that doesn't make you ask a question, i don't know what would this is basically like a guy robbing a bank and uh you decide to go. Let him start up his own bank afterwards, yeah. You know what, since you were robbing the bank, let's just uh. Let's just let you off the hook, easy peasy, lemon, squeezy and uh.

Maybe it was an accident. Maybe it was a mistake whatever, and then you just do the same exact thing again, except it's on a much larger grander sort of scale. Well, this happened here in 2012, hwang committed to insider trading, which was obviously illegal and continued on to create rk ghosts, which is what we are here to talk about today. Our gigos had massive problems and to put in the most simple way possible, you can think of this entire fraudulent scheme as one big freaking pyramid scheme it it's great, while the going's good and once you run out of funds and once you run out of people, The trick, and once you run out of money and liquidity, you reach the top of the pyramid and things come crumbling down from the base up and it wrecks everything - and that happened to be the case here, with bill huang and with rk ghost.

As you read on its long positions, tended to be both highly leveraged and highly concentrated, meaning that there was maybe five to one six to one ten to one uh dollars that were going into each investment alongside being paired into a very small amount of stocks. Within their portfolio, you read on leverage ratios of between 400 and 700 percent was as much as they had invested in these different stocks up to as high as 1 000 meaning if they had invested 100 in capital, it had a thousand dollars in exposure 900 extra Dollars coming from a different source to add to their position now, this is incredibly risky. If you, if you were to look at retail investors, you're pitched on a very regular basis to never touch margin. It's a bad thing.

You shouldn't you shouldn't, be leveraging yourself. Ten to one because if things go, south hits the fan bam, you get evaporated just like that, and that happens to be the case with these guys. It makes you ask a question: how often does this sort of thing happen? Well, it happened here they had a thousand percent 400 percent 700 exposure leverage taking place, which brings us into the actual case itself the evaporation, the absolute crumbling of what was rk ghost and, quite sadly, and quite frankly, their crumbling and their downfall affected. More than just the hedge fund, it affected the other investors that were in these top 10 stocks, which we're going to discuss here in a little bit.

So the case itself obviously includes rk goes. It includes bill huang the defendants who were very deceptive and committed to market manipulation, tactics. These market, manipulative tactics artificially moved the stock, as you can see, highlighted right here, some of the names viacom and discovery - probably the top two. You can probably think back to march of 2021 when these stocks collapsed well.

Rk ghost was the villain behind that collapse. They got margin called because eventually, the pyramid scheme came to an end. This was achieved largely through an entry into sbs's. Now we mentioned this briefly before, but this is uh a security based swap.

So i draw drone rule here. I drew out right here really quickly what this kind of looks like. So here's the circle, here's the endless circle until eventually one of these things can no longer happen uh. What archicos would do is they would invest money right, they would invest money, and this is where you come back to how much these guys made.

They turned 1.6 billion into 36 billion, so obviously a very lucrative strategy. They would invest money long, they would make money long and then they would go over to a lender or a counterparty. They had quite a few. I think it was up to about 12 different counterparties that were helping them out with these security-based swaps, which is essentially an opportunity to lend out capital in exchange for collateral.

So they would lie to lenders and counterparties about how much money they were actually managing. And this has to be a pretty grand scale sort of lie, because if you think about getting a business loan from a bank, it's not as simple as yep i'm worth a million dollars. Can i have a million dollar loan? Then you got a show. You got to show them, which means these guys likely forged some form of paperwork in order to get that capital in the first place.

Very deliberately, very deceptively lied to lenders and counterparties to get those security-based swaps in which they succeeded. They got money in which they received that leverage for a collateral, uh sort of loan. Maybe they collateralized uh, hey, we got we got to have maybe for every 10 billion dollars. We give you.

You have to be able to give us a billion dollars in collateral. Uh, if things go bad, so they get that collateral, they send over the money and then they invest and they continue on, and this worked back spectacularly it fabulously couldn't have gone any better until the going got bad because they made a lot of money. You know you could come back here and see at the peak. In march 2021, they had over 160 billion dollars in exposure 36 billion dollars that they actually had invested in their own personal capital, which is a drastic increase from 1.6 billion and 10.2.

Lots of leverage lots of gains did very well well. Here's the problem eventually that stopped working because, as we all know, in a pyramid scheme, once you get to the top there's nowhere else to go uh so there's synthetic exposure that they had through these sbs and where they were managing a lot of uh. These particular names, these particular tickers securities, eventually came coming down and crashing, and what were some of the manipulation tactics that that led them to this rise until the eventual downfall of the company? Let's discuss that retail investors have been on to this for a while. Now uh and you've been called stupid.

We've been called stupid. You've talked about things such as a short ladder attack for example, or perhaps taking advantage of the pre-market and illiquidity there's not a lot of liquidity happening in the pre-market, meaning it's very easy to push things up. Maybe front loading uh at the open or trying to set the tone at the close. These are all things that archagos, admittedly committed to when they pushed specific names up with their market manipulation tactics for their 35 billion fraud check this out, archico's exercise domination over the market of certain issuers securities.

What were some of these tactics check this out in the pre-market? They would set the tone where liquidity was low, meaning if there was a not a lot of money rolling in there was not a lot of activity, not a lot of volume on a stock. They would come in swoop heavy and just dominate the volume, because all it is is supply and demand. If you have the majority of the supply demands going to go wherever you want it to go right, you're setting the tone, they would do it, they would push prices up in the pre-market that way they would bid up prices. A lot of people talk about short ladder attacks, which is the act of pushing a stock down.

Not a lot of people talk about a long ladder attack which would be pretty much the opposite, you're trying to latter a stock up by bidding up prices in the last 30 minutes of the trading day as well, when maximum impact could be achieved on closing prices. Uh they would try to mark the close or essentially set the tone for the next trading day. You get a strong, close psychologically speaking. That's going to make investors want to dump money into that stock.

The following day you think of a good close on a stock. You think it's going to continue that momentum and then succeeded for quite a long time, and these are very deliberate market manipulation tactics that were utilized alongside their their 400 to 1 000 leverage to move stocks up, it makes sense and you can see sort of uh. The weight that this beared as they were able to synthetically, might i add, control these stocks. This is the percentage earnings that these guys have.

These different names gsx over 70 percent of outstanding shares discovery 60, 50 percent in iq, iwyi, 50 viacom 45 in the chinese. Google 30 in discovery class c all this to say that these manipulation tactics worked for a very long time and they were able to make a lot of money and absolutely control the narrative of these different tickers. And if i show you, the charts here, which i have screenshot and i'm going to show you uh in greater detail in just a second, they were able to make some damage. I mean you can see 17 all the way up to 80 bucks on this ticker right here with the minimum being 40-ish percent ownership down.

Here you can see 19 up to 80. You can see it peaked out. At 80, bucks dropped all the way to 21.. I mean this is very deliberate market manipulation, as you see, sort of the rise and the fall of the the total uh.

The margin call the liquidation of this firm, it's pretty filthy and they broke a lot of laws in the process. Check this out. There's four different laws that are being mentioned here, one two, three four. I want to thank somebody in my discord.

Uh, her name is ginger who took the time to throw these together, and i want to throw that out there. She was able to find this. This is great information. Uh number one is right here section.

This section provides that it shall be unlawful for any person on the offer sale of any securities by the use of any means or instruments of transportation or communication, interstate commerce or by the use of the mails directly or indirectly, to employ any device scheme or uh Artifice to defraud or to obtain money or property by means of any untrue statement of a material factor, any omission to state a material fact necessary. Basically, they lied. They lied. They go on to more, shall be unlawful for any person directly or indirectly by the use of any means, blah blah blah blah to affect the short sale or to use or deploy any stop-loss order in connection with the purchase or sale of any security registered market Manipulation mm: we continue on check this out to employ any device scheme or artificial fraud to make any untrue statement or of a material factor to admit to state uh a material fact necessary to make lie.

You continue on you, see all this stuff to affect the loan or with one or more persons a series of transactions than any security registered on a national securities exchange or a connection with any security-based swap agreement with respect to such security, creating actual or apparent active Trading moving the price by yourself controlling the price. Absolutely by yourself. These guys manipulated a stock. They committed a 35 billion dollar fraud that ultimately screwed them sure, but they got off this deal.

Pretty nice screwed, you screwed the retail investor, it screwed anybody that was in these artificially raised stocks, and it makes you ask the question it makes you ask yourself uh how many tickers does this happen to and what were the impacts on retail investors? Well, obviously, retail investors and some institutions got the brunt of this. They lost a lot of money. I mean a lot of market cap got evaporated. They went from 70 bucks 79 bucks down to 25 for some of these different tickers uh, which will increase severe losses.

I mean you're losing pretty bad and, if you ask me this is uh. This is room for a class action. I think if people wanted to throw together a class action, lawsuit against bill huang and archicos, they could easily do it. This seems like it'd, be a slam dunk because he very obviously and probably manipulated the stock.

People got screwed on this, and it makes me wonder how many other stocks this happens to. So if we were to look at, for example, upstart upstart is a stock that i always think about. There was this guy who went on uh mainstream media, and he was talking about this ticker back when it was at 400 bucks. I have this day highlighted in red with this red arrow, because i'll never forget that day he came on his and the guy was asking him.

So what does upstart doing? He was uh. Well, they they uh uh, i'm sorry losing connection. I can't i can't hear you but tickers like this, which went from what a low of 22 bucks to 400 down to 74.. You got ta wonder what's happening here, maybe some more security-based swaps, maybe some more insane leveraging.

Maybe some more market manipulation some pre-market ladder. Ups, some some uh backloading at the end of the day. It's a tone set, you got, you got ta wonder how many names this happens to uh up starting hood, probably being two that just come to mind right off the bat robin hood. Both these stickers have gotten absolutely slapped uh and to me it is because specific people wanted to do x and when x, was no longer possible instead of doing y and at the end of the day, this was the repercussions i mean massive massive losses.

This is the repercussions of a 50, a 35 billion dollar fraud and the outcome. Sadly, unlike our example earlier in the video where you rob a bank for a million dollars, and you get screwed, this guy just had to pay a hundred million dollar bond and he's free u.s magistrate, judge, jennifer, willis, ordered hwang, who was wearing glasses and a green Turtleneck as if anybody gives a released on 100 million dollar bond secured by two properties and five million dollar cash bill, how this guy was able to keep any of his money that he made fraudulently is beyond me. But he was able to pay his bail and get out so he's free, his travelers restricted to the new york area and he must attest to the court that he lost his passport. So there's the end state and there's the story of a 35 billion dollar fraud and, if there's anything that i think could be taken away at the end of the day, it's as long as you are the guy robbing the bank.

You will never get away with it, but if you throw on some glasses and a green turtleneck, you're, probably gon na be just fine. That's what i've got for this video guys i'll catch you on the next one, much lovely taps, peace.