Bitcoin Investor in China Takes Own Life After Failed Leveraged Trade Involving 2,000 BTC
- A Chinese crypto trader lost approximately $16 million after entering a short position which did not turn out in his favor.
- The trader, named Hui Yi, was the co-founder and CEO of BTE.TOP, a cryptocurrency marketing analysis platform, and he committed suicide on June 5, 2019, after losing 2,000 bitcoins in a crypto trade.
The cryptocurrency market, like any other market, is full of risks and returns with some people who invest in the market making a lot of money such as some of the initial bitcoin Investors who made millions overnight and with some losing money as a result of hacks or simply a bad investment decision.
Unfortunately, a loss experienced by play a Chinese bitcoin trader has turned deadly as it has been alleged that he committed suicide after losing roughly $16 million in a single position of investors money. Hui Yi, during his lifetime, had been the co-founder and CEO of BTE.TOP, a cryptocurrency marketing analysis platform and passed away on June 5, 2019, after losing 2,000 bitcoins after entering a short position that liquidated.
He had leveraged his position by 100 times which further increased the level of loss that he had suffered and feared he would not be able to recover, he killed himself. His death was reported by an ex-partner of him after speculation emerged of the 2,000 bitcoins lost having been embezzled from customers and since the announcement of his death, exit scam rumors have surfaced similar to those that surfaced during the QuadrigaCX scandal earlier this year. His death has also brought up yet another discussion about the dangers of leverage trading.
Leverage trading is a rather controversial concept in cryptocurrency because of the risks involved in it. Leverage trading essentially means trading with cryptocurrency that is more than the amount held in hand by the investor themselves. A broker, in this case, will allow the investor to trade with several times the amount of bitcoin they have such as a person who only holds one bitcoin trading with two bitcoin with the second bitcoin being given by the broker with the agreement of profits being split if any. Unfortunately, should a deal end in a loss, the person who engages in leverage trading will be indebted to the broker and a in the case of YI, was indebted by 100 times the amount of Bitcoin he actually owned and it would be a very difficult debt to pay off.
This practice has been condemned by those within the crypto industry because many believe that it lends credibility to the belief that the crypto market is nothing but a get-rich-quick scheme and is dangerous for traders. Others believe that it simply a risk that is involved in all forms of trading and is not exclusive to the cryptocurrency market. Some countries have even put a cap on the amount that people are allowed to leverage trade for fear of massive losses taking place and in the case of Yi, people's lives being ruined in the process.
Had Been Expecting BTC Price to Drop to $7,000, Instead It Surged to $8,900
Social media messages that have been released from May 31, 2019, show that Yi had been expecting bitcoin to fall to $ 7,000. Unfortunately, bitcoin reached a high of surly about $8,900 and saw some resistance. In all trading markets investors often have expectations as to what the price of a particular asset will fall or rise to and while that in itself is not a bad thing, staking huge funds based on speculation obviously has its risks involved
The unfortunate incident regarding Yi will likely bring up more discussion around leverage trading as well as the dark sides of crypto trading in general.