novelDen Chapter 128
Chapter 128
Translator: DreamscribeNormally, our department staff come to work in the morning and leave in the afternoon.
However, on days with major issues, there are times when we come in the morning and get stuck at the office until midnight without being able to leave.
“Wow....... Is, is this really happening?”
“How much is it going to rise?”
But there was not a hint of exhaustion.
Everyone was simply staring at the monitors, as if in awe.
“It went up nearly 90% yesterday. But today, it’s already passed 90% and hit 111%!?”
“It’s because there are no sellers, only buyers. Honestly, I think it might even break through 130% today if it goes well.”
Not too long ago, GameStop’s stock price was just 20 dollars.
But with the firepower of the online community and even Milon Tusk posting about GameStop on social media, it attracted massive attention.
Not just from the U.S., but people were flocking in from overseas as well.
Hadn’t people started spending more time at home due to COVID?
They were already bored, and this was just the perfect bait.
Targeting people all over the world!
“It’s already broken through 300 dollars.......”
“Agh. What a waste. We should’ve put in more than just 3 million dollars.”
I had put in exactly 3 million dollars.
One million dollars per day, over the course of three days, and then I simply watched.
And now, that had already turned into more than 30 million dollars.
That’s over 10 times the profit.
If I had invested a larger amount, I could’ve earned even more.
But my instinct told me to only put in this much.
“CEO-nim. This... it looks like it’ll keep going up, don’t you think? Should we try putting in more money even now?”
Just yesterday it rose 90%, and now it’s passed 111% and is heading toward 120%.
So I kept checking from time to time whether I should put in more money, but my instincts didn’t respond.
“No. I don’t think there’s any need to put in more.”
The fact that I only put in 3 million dollars means the goal wasn’t to make money.
Then why did I end up putting money into this?
“Do you think the stock will drop from here, ceo-nim?”
“But no matter how we look at it, there’s no sign of it dropping. Just look at this buy wall right now. It’s enormous. It’ll pass 120% in no time and will enter 130% territory in a flash. It might even hit 200% in just a single day.”
Even I could tell the upward momentum was no joke.
While the attention it got from people played a part, the short squeeze effect was a major factor too.
“The short sellers missed their window to exit. They thought it would spike briefly and come back down, but they never imagined Milon Tusk would jump in like that.”
Milon Tusk hates short-sellers.
Wasn’t it the short-selling forces that had always harassed his company?
So I think he intentionally got involved.
No, it had to be intentional from the start, since the reason GameStop even became a topic in the community was because of the excessive short-selling positions.
“The biggest crisis right now is at Melvin Capital, apparently. And multiple hedge funds have money in this too.”
Short selling is a system where you borrow stocks and sell them, then buy them back later at a lower price to return them. These short-selling forces entered expecting to profit from such a margin.
But the stock suddenly launched like a rocket, and they couldn’t respond in time.
They probably also believed it would rise briefly and then return to normal.
Unfortunately for them, GameStop was only heading upward.
It showed no intention of coming down at all.
Then what would happen to the short-sellers?
Unable to handle the skyrocketing margin requirements, they begin liquidating their positions quickly, which in turn drives the price even higher.
This is a short squeeze.
“But wasn’t the short-selling ratio over 140% in this case? That volume being dumped all at once is what caused the price to blow up even more.”
Even a 50% short interest can be disastrous if a short squeeze happens.
But a short squeeze at 140%? This was a catastrophe.
“So the stock will keep rising?”
“Yes. Anyone can see that this is a setup where the stock price can’t help but keep going up.”
I reached out and touched the GameStop stock.
“!?”
Then, in an instant, a lightning-like shock struck me with overwhelming force.
The impact was so intense that it left me dazed.
“CEO-nim......?”
“What’s the likelihood of GameStop suddenly dropping?”
“Huh? Ah...... honestly, is a sudden drop even possible?”
While everyone tilted their heads in confusion,
Lee Hye-rin carefully opened her mouth.
“There’s only one possible way.”
“What is it?”
“If the brokerage firms block further trading.”
“Circuit breaker?”
“No. That won’t stop it. I mean literally blocking trading for just the GameStop stock.”
“......Is that even possible? You’re saying the firm itself would block it, not the committee?”
In short, it was an unreasonable scenario.
Sometimes the committee suspends trading, but a brokerage firm intentionally blocking trading to bring the price down has never happened before.
“That’s exactly my point. For the price to drop now, something that irrational would have to happen. And even if they did block trading, once it reopens, the price would just go up again.”
“So it’ll keep rising, then.”
“Yes. But there’s already a rumor spreading in the community. Right now, Losthood is the most widely used brokerage app in the U.S., right? The problem is, they’ve been pushing this zero-commission system, and because of that, Losthood might be facing financial trouble.”
Losthood attracted a massive user base in a short time with its radical zero-commission policy.
This was because of its use of the PFOF system.
Instead of charging customers a commission, it sells their orders to market makers.
This method is extremely efficient when the market is stable and predictable.
But in cases like GameStop, where there’s abnormal volatility and trading volume, Losthood has to pay astronomical margin requirements to the clearinghouse.
“They might block trading because they can’t pay the margin?”
“The margin amount is getting way too high. But...... it’s a very unlikely scenario.”
“Yeah. If they really block trading, how are they going to handle the backlash.”
I also thought that would never happen.
But that powerful jolt I felt earlier from GameStop.
It felt like the kind of shock you’d experience when facing a horrifying, unbelievable situation.
Which means.......
No way. That’s ridiculous.
***
“......What happened?”
“It closed at 134%.”
Taines's face had become half its size in just a few days.
But it wasn’t just Taines.
All the executives in the room looked the same.
“What about the margin?”
“We managed to barely fill it with an emergency loan...... but the problem is, we haven’t paid all of it. We’ve negotiated with the clearinghouse to give us more time for now, but if the price surges again tomorrow like it did today.......”
There was no need to finish that sentence.
Failing to pay the margin means declaring default, and that would result in Losthood’s trading being suspended that day.
In other words, all trading by customers using Losthood would also be suspended.
“How the hell did it come to this?”
Losthood, to be fair, also felt wronged.
If it weren’t for GameStop, they wouldn’t have been cornered like this.
“The zero-commission model is what’s ultimately dragging us down. If only we hadn’t done that.......”
“Are you blaming me now? We achieved explosive growth because we implemented the full zero-commission policy.”
But as they say, live by the sword, die by the sword.
They thrived thanks to zero commissions, but in the end, that very system put Losthood on the brink of default. If they had operated like other brokerages without zero commissions, they wouldn’t be shaking this badly.
“There’s nothing wrong with our system. The issue is that we exposed our weakness too clearly to the enemy.”
“Enemy?”
“I mean Kwangwoon. They used Milon Tusk, social media, and the community to stir up everyone into jumping into GameStop and pushing up the price. They knew. They knew that if the stock price surged this fast in such a short period, it would be a critical blow to us at Losthood.”
An irrational event doesn't happen by coincidence.
It’s highly likely that it’s someone’s intention.
And this was a clear setup.
Their goal wasn’t to destroy the short-sellers riding on GameStop.
The target they were aiming for was only one.
Right here, Losthood.
“These vicious bastards......! How could they go this far!”
“Kwangwoon is already infamous on Wall Street. If someone doesn’t follow their will or doesn’t align with their interests, they crush them without mercy, no matter who it is.”
He had heard about the notoriety they had built up until now.
But having experienced it firsthand, they were far more terrifying than what he had heard.
“What the hell do they even want from us to go this far?”
“Don’t you think they want Losthood gone? We’re actually threatening their territory.”
It was infuriating.
So unfair it made him feel like he was going insane.
But there was nowhere to appeal this unfairness.
In the world of the survival of the fittest, it was Taines’s mistake to have revealed a weakness.
The issue right now wasn’t who had orchestrated this situation, it was the margin they had to pay immediately.
“The clearinghouse seems to understand our situation, and they said they’ll give us a bit more time. But even they said that if the stock price continues to climb from here, they won’t have any options left.......”
“Then what the hell do they expect us to do? Suspend trading?”
“.......”
At that moment, a strange atmosphere filled the meeting room.
“W-wait. What is everyone thinking right now?”
“CEO-nim. That might actually be our best option.”
“No. Are you seriously suggesting we should block trading?!”
“Completely blocking trading won’t be effective. Even if we block it, once it's reopened, it’ll just go up again.”
“Then.......”
“We stop buy orders altogether. Only allow selling. If we do that, everyone will panic and start selling, right?”
Taines blinked.
Was everyone serious right now?
“If we do something like that, do you have any idea what’ll happen?! The people who lose out will file lawsuits left and right!”
“That’s why we need to assemble a legal team right now. And there’s a fairly reasonable argument we can use. If we declare default, the shockwave will spread to other brokerages and crash the financial market like a domino effect. If a major brokerage like ours collapses, it would be just like the Lehman Brothers incident.”
We could argue that we were forced to remove the buy button to prevent such a catastrophe.
“There’ll definitely be lawsuits, but we just need to drag them out. Aren’t most of the investors retail traders anyway? If we build a strong legal team, the court will probably set a reasonable settlement amount.”
“We’ll definitely be fined too, won’t we?”
“Even so, the company won’t go bankrupt. We’ll still be able to operate.”
Blocking all buy orders.
No matter how he looked at it, it was an unbelievable, unprecedented measure.
“What about Kwangwoon and Milon Tusk? What if those bastards don’t let it slide?”
“They’ve already achieved their goals. Kwangwoon successfully suppressed our influence, and Milon Tusk crushed the short-sellers just as he wanted. I doubt they care much about lawsuits. They wouldn’t want to waste money on something pointless. They already know how this will end.”
“.......”
Kwangwoon, and Tusk.
If it weren’t for those bastards, things wouldn’t have spiraled this far.
He wanted to go find them right now and throw a punch, but it was unfortunate that he couldn't.
But next time, he would definitely repay this humiliation.
“Phew.......”
Taines fell into brief contemplation.
But his hesitation didn’t last long.
***
GameStop had shown a miraculous rise of 134% in just one day.
With forecasts that it could go up to 200% the next day and more and more people joining the frenzy, perhaps Losthood had been driven into fear.
“In all my life, I’ve never seen anyone remove the buy button. Is this really something that can happen in the 21st century? That’s America we’re talking about. Aren’t they getting shot for this?”
An unprecedented event in financial history had just taken place.
As the market opened and GameStop’s stock began to rise again, Losthood suddenly removed the buy button.
In other words, only sell orders were allowed.
Had they suspended all trading, the damage might have been less severe. But because they left only the sell button active, panic selling erupted everywhere.
“The losses are massive, right?”
“Yes. It went up to $483 and then dropped to $112. That’s $26 billion wiped out in an instant.”
26 trillion won disappeared in just a few hours.
Naturally, investors' rage was sky-high, and Losthood had yet to issue any response.
“But didn’t you also put money in there? Three million dollars.”
“Yes. But we got in when it was around $20, so we didn’t take any losses. Not yet, anyway.”
“Right. I remember thinking it was strange when I got the report. Why would you only put in just three million dollars?”
To be honest, I still hadn’t figured out why my instincts had made me invest exactly three million dollars in this.
“But when this incident happened, I understood immediately. This was the exact moment you’d been waiting for, wasn’t it?”
“......?”
“Three million dollars, given the scale of Kwangwoon, is a bit ambiguous. It’s not enough to look speculative, and not enough to be accused of stock manipulation. And then, our biggest rival, Losthood, caused this massive blunder.......”
Hyungnim continued speaking with clear amusement.
“This gives us the perfect justification to get involved, doesn’t it? We’ll take charge of the lawsuits on behalf of the investors.”
At that moment, a chill of instinct shook my whole body.
So this was it.
“......As expected, only Chairman-nim understands what I’m thinking.”
“Wahaha. Of course. We go way back.”
If I hadn’t invested in GameStop, I wouldn’t have a valid reason to step into this matter.
But now, I was also a shareholder who had put money into GameStop.
“That’s why I brought this guy with me today. You’ve met before, right?”
“Ah, yes. You’re Executive Director Kim Jae-hyun, right?”
“Yes, CEO-nim. Thank you for remembering.”
It was Executive Director Kim, who oversaw the newly established Legal Team at Kwangwoon.
“Chairman-nim has poured massive funding into the Legal Team. At least within Korea, there’s no other firm that can compete with ours.”
“Does that mean overseas litigation is also possible?”
“Yes. We’re already in contact with several major international law firms. We’re planning to gather all the investors who suffered damages from the GameStop incident and have Kwangwoon represent them in a class-action lawsuit.”
“Then the attention will pour in. Didn’t KW Exchange just get approval to operate in the U.S. markets as well? We can use this to draw Losthood’s users over to us, don’t you think?”
In other words, the plan was to create a major lawsuit and reap the full promotional benefits from it.
It wasn’t a bad idea, and my instincts responded once again.
“All that’s left now is the lawsuit’s scale. The question is: how much can we make Losthood cough up?”
“How much are you thinking?”
“Realistically speaking...... it’s likely to end in the tens of millions of dollars. They won’t come to court unprepared, and the court will probably reduce the amount......”
While Executive Director Kim was speaking, I quietly wrote down a number in my personal notebook.
But...... the number kept going up.
Uh-oh. How high is this going?
Then suddenly, my pen stopped at a number.
Seeing it, I was so surprised I mumbled without thinking.
“100 trillion won?”
Executive Director Kim and hyungnim both turned to look at me.
“......What? 1-100 trillion won? Are you suggesting we file the lawsuit for, uh, one hundred trillion dollars?”
Then hyungnim burst into laughter beside him.
“I told you, Director Kim. Our CEO Jung doesn’t mess around when it comes to scale.”
“B-but Chairman-nim, 100 trillion won is an impossible amount. The court would never approve that kind of ruling.”
“Well, we can still take a shot, right? It’s guaranteed to stir up attention. Hahaha.”
Hyungnim patted Director Kim’s back with a chuckle.
“.......”
I gave a sheepish smile to Director Kim, who was staring at me with blank eyes.