[HN Gopher] He Lost $36B in a Week. Now Bill Hwang Is Fighting t...
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He Lost $36B in a Week. Now Bill Hwang Is Fighting to Avoid Prison
Author : haltingproblem
Score : 60 points
Date : 2024-05-04 19:18 UTC (3 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| luma wrote:
| https://archive.ph/6EkIS
| Animats wrote:
| But he still has $100 million left.
| mirekrusin wrote:
| He should put it in Swiss bank so they can't touch it.
| rustcleaner wrote:
| Better yet: Monero.
| vkou wrote:
| Hiding money that a court orders you to turn over in crypto
| is a great way to be held in prison for context of court
| until the end of your natural life.
| BenjiWiebe wrote:
| *contempt of court
| codetrotter wrote:
| Wouldn't putting it in a foreign country bank account be
| similar?
| blackhawkC17 wrote:
| Thanks to US pressure, Swiss banks are no longer as
| secretive as they used to be. They'll quickly give up
| information about any American when requested by the
| government.
|
| To add, anyone under indictment and bail is closely
| monitored. They can't just transfer money to a Swiss Bank
| without raising an alarm.
|
| HNers enjoy cooking up movie-plot schemes that are dumb
| in reality.
| matheusmoreira wrote:
| In my country, there's a guy who actually did it. An
| anarchocapitalist named Daniel Fraga. Just a completely
| surreal guy. Police would show up to his house and he'd
| film himself calling them parasites of the state to their
| faces. Used to make videos criticizing the system, the
| government, the courts, the judges. Eventually tried to
| expose corruption. Government tried to freeze his
| accounts and discovered he had $1 in them. He had gone
| all in on bitcoin. To this day I believe the government
| has not seen the money. One day he just kinda
| disappeared. He's either in some paradise enjoying his
| billions or dead.
| matheusmoreira wrote:
| They're gonna imprison him either way. Being guilty of
| pissing off the judge is sure to be a lesser crime than
| whatever it is he's guilty of.
| fHr wrote:
| I mean you can just trace the source that buys it no? And
| then hold him in prison for it anyway.
| HeatrayEnjoyer wrote:
| > I mean you can just trace the source that buys it no?
|
| How would you do that?
| codetrotter wrote:
| If he uses any of the Centralized Exchanges (Kraken,
| Coinbase, etc), those exchanges will have KYC info
| showing that he/his company was the buyer
| ano-ther wrote:
| Archegos contributed to the demise of CreditSuisse, so I am
| not sure if the Swiss would welcome him again.
|
| https://www.finma.ch/en/news/2023/07/20230724-mm-archegos/
| mirekrusin wrote:
| I know, hence the joke.
| TacticalCoder wrote:
| > He should put it in Swiss bank so they can't touch it.
|
| That era is long gone.
| underlipton wrote:
| I'd put money in a Swiss bank like I'd put money in Robinhood
| or Mt. Gox.
| stygiansonic wrote:
| Reminiscent of a scene from Billions:
| https://www.reddit.com/r/Billions/comments/czlg4u/need_help_...
| mhh__ wrote:
| I'm not seeing the market manipulation unless it's some quirk of
| the formal definition rather than the informal meaning of the
| term?
|
| I was under the impression that he had an old fashioned value
| play, levered up to the moon using total return swap (these do
| have real uses) which blew up on him.
|
| Unless he deliberately mislead his brokers should was it illegal?
| bobthepanda wrote:
| The SEC is alleging that he did mislead his brokers:
| https://www.sec.gov/news/press-release/2022-70
|
| > The complaint also alleges that, as part of the scheme,
| Archegos repeatedly and deliberately misled many of Archegos's
| counterparties about Archegos's exposure, concentration and
| liquidity, in order to get increased trading capacity so that
| Archegos could continue buying swaps in its most concentrated
| positions, thereby driving up the price of those stocks.
| Ultimately in March 2021, price declines in Archegos's most
| concentrated positions allegedly triggered significant margin
| calls that Archegos was unable to meet, and Archegos's
| subsequent default and collapse resulted in billions of dollars
| in credit losses among Archegos's counterparties.
|
| > The SEC's complaint, filed in federal district court in
| Manhattan, charges Hwang and the other defendants with
| violating antifraud and other provisions of the federal
| securities laws. The complaint seeks permanent injunctive
| relief, return of allegedly ill-gotten gains, and civil
| penalties. The SEC also seeks to bar individual defendants from
| serving as a public company officer and director.
| pram wrote:
| Supposedly lying about the scale (and risk) of his positions to
| get more leverage from banks. It's good old-fashioned fraud.
| psaux wrote:
| Correct, it is underlying assets value and correctness. This
| fuzzy logic has always confused me
| kjksf wrote:
| Imagine you have a house and you go to 5 different banks and
| take 5 different mortgages.
|
| One mortgage is safe for the banks because they can take back
| the house. Low risk means low rates.
|
| If you could take 5 mortgages, that would be very risky for the
| banks so they wouldn't give you a loan or charge much higher
| interest.
|
| Hence you can't take more than one mortgage.
|
| But what if you lie to the bank when you apply for mortgage?
|
| Well, to prevent that we made lying to the banks about such
| things a crime.
|
| Hwang is accused of a variation of that: he got loans from
| multiple banks without telling them about other loans i.e.
| lying to banks.
|
| He made leveraged investments into lousy stocks and when he got
| called on those loans, he couldn't repay them and banks that
| gave him loans lost billions.
| notfromhere wrote:
| There is this notion that white collar crime is complicated
| but it's really just lying, stealing, or cheating
| waltbosz wrote:
| Aren't there mechanisms in place to verify Hwang's financial
| claims?
|
| When I get a mortgage I have to provide proof of income and
| assets with bank statements.
|
| Did he forge documents, or did the banks just take his word
| for it ?
| phire wrote:
| It's not great reporting.
|
| The article seems to be fixated on how he lied to his finance
| sources, and acts like that was the only thing he did wrong.
|
| If you read the SEC lawsuit [1], the problem is less that he
| lied to his finance sources and more about what he did with the
| funds, which was blatant market manipulation:
|
| "Archegos, through Hwang and Tomita, effected this scheme by
| dominating the market for its Top 10 Holdings, as well as by
| "setting the tone" (i.e., engaging in large pre- market
| trading), bidding up prices by entering incrementally higher
| limit orders throughout the trading day, and "marking the
| close" (i.e., engaging in large trading in the last 30 minutes
| of the trading day) and by other non-economic trading, all with
| the goal of artificially inflating the share prices of its Top
| 10 Holdings."
|
| I mean, obviously he lied to his finance sources. It's not like
| he was going to tell them that he was using their funds to
| manipulation the market.
|
| [1] https://www.sec.gov/files/litigation/complaints/2022/comp-
| pr...
| waltbosz wrote:
| Interesting technique. Aren't there sophisticated automatic
| trading algorithms that enable high speed trades.
|
| I wonder if any of them are designed to watch out for this
| behavior and avoid those stocks.
| dahdum wrote:
| He deserves prison of course, but I'd raise a glass to his
| legend. At least he fleeced the savvy.
| NotYourLawyer wrote:
| For what?
| paulddraper wrote:
| Fraud
| pbj1968 wrote:
| Which is the only reason he's being charged with anything
| blackhawkC17 wrote:
| I'd like to meet Bill Hwang and ask, "What the heck were you
| thinking?"
|
| All those paper profits would have to be converted into real
| money at some point, and the massive sales would have dampened
| the share prices, negating the point in the first place.
|
| He was trading like a WSB subscriber but with actual billions in
| capital. From what is known publicly, the guy lived frugally and
| wasn't a status or prestige chaser. He seems more like someone
| with an excessive risk appetite who got in over his head.
|
| I also find it interesting that Bill Hwang amassed over $30
| billion, and no one would have known if his family office hadn't
| fallen apart. This makes me wonder how many Wall Street
| billionaires are hiding in plain sight, only known by industry
| peers.
| SuperNinKenDo wrote:
| I know it's an irrelevant aside, but can I just say, since the
| article decides to lead with it, that the painting created from
| his vision is utterly underwhelming. How you could take such a
| vision and turn it into something so mundane is beyond me. I
| almost wonder if it's just the classic money laundering through
| painting valuatiom shtick.
| nicklecompte wrote:
| Apparently it's not a painting:
|
| > The artwork, commissioned in 2016, is rendered in metal mesh
| by renowned South Korean artist Seungmo Park. Park also created
| a larger-than-life depiction of Olympic sprinter Sebastian Coe
| for Nike's headquarters in Oregon and the facade of Gucci's
| flagship store in Seoul.
|
| I noticed the texture looked odd when I zoomed into the photo.
| I suspect Park did the best he could, but the medium itself
| seems poorly-suited for the vision.
| xorvoid wrote:
| Why does the intersection of "being into Jesus" and "being into
| money" always seem so correlated with "fraudster"?
| pavel_lishin wrote:
| Because Jesus was _very_ clear in his beliefs about money.
| talldayo wrote:
| In an extremely reductive sense, it's likely because fraudsters
| envy the control religion exerts over it's adherents. Very few
| things can make someone change their morals, give up their
| possessions, and accept their newfound poverty with excitement.
| It's the morals-inversion framework that makes religion so
| powerful (and explains the traditional church-state funding
| relationship). An effective cult-of-personality or even
| business ultimately strives to achieve the same transcendent
| relationship. It's dedication that defies logic.
|
| Instead of cracking open _that_ can of worms though, I think it
| 's more interesting how faith is twisted throughout history.
| Gnosticism is a favorite example, attempting in many ways to
| refute the _story_ of the Bible while strictly attempting to
| follow a faithful logic and gospel-centric narrative. It 's
| well worth reading into if anyone hasn't seen it, even just for
| the novelty of it. While it's easy to laugh at today, it's also
| easy to see how "illusion" and "revelation" focused apocrypha
| could have shaken the reality of clergymembers in an age when
| the Internet didn't exist.
|
| And as for the article...
|
| > In his vision, the blood of Christ washes over New York,
| cleansing the great metropolis of its sins
|
| I think the activeness of Hwang's imagination is more of an
| indictment of his nutjob-level than his faith. If he told
| investors the same story sans-Christ, I think we would still be
| in agreement that he's a huckster trying to spew revelatory
| nonsense.
|
| It's hard to draw conclusions on something as divisive as
| faith, but the writing of men is readily and easily imitated to
| petty ends.
| travoc wrote:
| There are 2.4 billion Christians on earth, so you could find
| correlation between "being into Jesus" and any behavior you
| wanted.
| blackhawkC17 wrote:
| I'll describe Hwang more as delusional reckless gambler than
| fraudster.
|
| As the article implies, it's not like he cherished the high
| life and bought lots of assets. He seems like someone addicted
| to stock gambling.
| spxneo wrote:
| Bill Hwang, Masayoshi Son are all just straight up gamblers.
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