- The man is suspected to have used investors’ money
- Speculation is rife he has faked his death to avoid repaying the funds
- Leverage trading is highly profitable but extremely risky
A Chinese man has allegedly committed suicide after losing 2000 BTC belonging to investors in a highly leveraged trade position. There is speculation the man could have faked his death to avoid paying back his clients.
Magnified His Losses
According to Chinese crypto publication 8BTC, an ex-partner revealed Yi’s death as it raised speculation that 2,000 Bitcoin had been embezzled from clients. Speculation has also been rife that Yi could have faked his death to avoid paying back his clients. Hui Yi, who was the co-founder and CEO of cryptocurrency market analysis platform BTE.TOP, reportedly died on June 5.
The trader lost 2000 bitcoin after entering a short position which got liquidated after going the opposite direction. At current prices, Yi lost nearly $16 million in one position. Yi had leveraged his position by 100 times and thereby magnified his losses.
Trader Expected BTC to Fall
Yi may have been expecting bitcoin’s price to fall before he entered a short position of 2000 BTC. By using 100x leverage, the trader was effectively trading 200,000 Bitcoin and BTC only needed to go up 1 percent from Yi’s entry price for him to lose all the funds. Screenshots from Yi’s WeChat Messenger show that on May 31 the trader expected BTC to fall to $7,000, which might have been informed by the fact that Yi was expecting a retracement.
Hours earlier bitcoin had reached a yearly high of slightly above $8,900 where it hit strong resistance. Yi was most likely expecting support at the $7,000 level. Instead, bitcoin touched the $8,300 mark and bounced back to $8,700 in the days that followed, rather than continuing the downward trend as Yi had expected.
Leverage Traders Are Addicted
As per the 8BTC report, the company Yi worked for closed over a month ago, meaning that Yi was using investors’ funds while the company had ceased operations. Just like the case last December for QuadrigaCX, speculation is rife that Yi could have faked his death, suspecting that Yi had earned a lot before the major loss and there would have been no need to commit suicide.
Chances are that Yi could have been in financial trouble to the extent that the trading of clients’ funds was a last ditch effort to recover, and it failed. Leverage traders are so addicted to the illusion of high profits that they absolutely forget the risks in it. Some even risk mortgaging their real estate to trade cryptos with leverage, dreaming of getting rich overnight, but most end up with debt instead. Who will take responsibility for the 2,000 Bitcoins of BTE.TOP clients remains unclear for now.