HK Trader Embezzles $50M for Leveraged ETF Bets, Faces $150M Loss

A 26-year-old Hong Kong trader embezzled HK$50M to bet on a leveraged Tesla ETF. Combining margin and product leverage, he faces a HK$150M paper loss and has been arrested.

Woofun AI reports that a 26-year-old trader in Hong Kong was arrested on suspicion of theft after allegedly embezzling HK$50 million from his employer. Between January 9 and July 20, the individual used these funds as margin to establish a two-times long position in the South Southern Dongying ETF. The combination of financing leverage and the ETF’s inherent leverage amplified exposure, resulting in a paper loss of up to HK$150 million following a sharp decline in the underlying asset.

The involved ETF surged to HK$193.65 in late June before dropping over 72% to HK$52.58 by July 20. Positions remain open, meaning losses could expand with further market volatility. Riches Asset Management Limited, the alleged source of funds, is not licensed by the Hong Kong Securities and Futures Commission. Riches Securities stated the individual is not an employee and the incident is unrelated to their operations.