Today, close to half a billion dollars worth of Bitcoin shorts have been liquidated. This is after Bitcoin shot up to test a high of $61k. However, this is not the first time that shorts have faced massive liquidations after betting against Bitcoin, and in some situations, this has landed people in trouble.
In China, an executive of a blockchain firm is being accused of misappropriating more than $45 million of State Bitcoin. Gao Ziyan, a 27-year old executive of Beosin, tried to short Bitcoin by leveraging State-owned Bitcoin in the firm’s custody. When Bitcoin was trading at $10,500, Gao short it, but the top crypto kept rising until it retested its 2017 highs of $20k. This led to a loss of more than $45.7 million.
While the company has denied any involvement in the massive loss, court documents show that the State is individually targeting Gao for the loss. Nonetheless, the company has taken out his name from its official website, an indicator of the issue’s seriousness.
The loss of millions of dollars by a single individual underscores the risky nature of leveraged cryptocurrencies trading. While it is profitable, it carries enormous risks, especially for novice traders.