After the Divorce, I Found a Thousand Bitcoins - Chapter 18

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This chapter was translated by Lunox Team. To support us and help keep this series going, visit our website: LunoxScans.com
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I Got Divorced and Found a Thousand Bitcoins Episode 018

The NextMove incident grew into a massive scandal.

[Wall Street Journal’s exposé! NextMove collapses! And the FBI moves!]

[FBI launches investigation into NextMove!]

[NextMove CEO, Shaodi Hou arrested at airport!]

[CHD Investment stated through an official announcement that “We have no connection to NextMove’s technology leak.”]

In the United States, articles related to NextMove poured out daily.

The FBI began a full-scale investigation and the SEC also joined in cooperation.

On top of that, the CEO was arrested and CHD, their financial lifeline, drew a line.

Naturally, related companies also began to withdraw their support.

[UPS announced through an official statement that “We will terminate our partnership with NextMove.”]

[Nvidia also drew a line with NextMove. They clarified they were victims by stating “Shaodi Hou also tried to leak our technology.”]

[NextMove’s stock price fell for three consecutive days, dropping from its peak of $60 to $22 after the Wall Street Journal’s exposé.]

A record-breaking crash occurred.

The stock price that was at $60 was cut by more than half, down to one-third.

In the United States, there was talk that NextMove might face delisting.

And this meant one thing.

“We’ve surpassed $207 million! The return rate is 58.79 percent!”

It meant KH Capital’s profits were increasing exponentially.

‘So this is how you fall into the swamp of short selling.’

I never knew my first short sale would bring this level of profit.

“It’s falling at an incredible speed as soon as the FBI got involved.”

“The FBI getting involved means it’s not just financial crime, but related to security, federal crimes, and national security. For all we know, the CIA might have been moving behind the scenes.”

“Wow… It feels like watching a movie.”

For ordinary people, FBI and CIA were things you’d only see and hear about in movies or American dramas.

Even though they had been in finance for quite some time, this was their first encounter with such matters.

Then Kwangho gave Kang Hyeon a meaningful look.

Catching that signal, Kang Hyeon spoke.

“Alright, everyone keep watching the market and let us know immediately if any new information comes in.”

“Understood.”

Kang Hyeon entered the Executive Office with Kwangho.

After closing the door, Kwangho said.

“The FBI might investigate us.”

“Us?”

“Yeah. We happened to take a large short position right before the stock price fell. This looks suspicious to anyone.”

Right.

It was way too suspicious.

If the SEC and FBI started a joint investigation, we’d be exposed immediately.

“They’ll scrutinize us down to every speck of dust.”

“Right. The Financial Supervisory Service will come in.”

The FBI has no investigative authority in South Korea.

But does that mean they can’t investigate?

No.

They can.

They just need to request cooperation from the Financial Supervisory Service instead of doing it themselves.

And the Financial Supervisory Service will scrutinize everything thoroughly.

“Plus, our previous trades would also look strange to others.”

Excluding Bitcoin.

It’s difficult to trace transaction records there.

No, the FBI might be able to do it.

Their investigative capabilities shouldn’t be underestimated.

Anyway, what’s on record is maintaining NASDAQ long positions.

We entered and exited at appropriate timing.

We didn’t catch it at the peak or the bottom.

Still, a 100 percent win rate was suspicious.

They’ll definitely dig into it persistently.

“We need to prepare on our end too.”

“Right. From one to ten, we need to finish all preparations.”

We need to prepare thoroughly.

Because they’ll definitely dig in relentlessly.

* * *

The FBI began investigative cooperation with the SEC.

“Look at this.”

They soon discovered something suspicious.

“Someone took a short position right before NextMove’s stock price fell.”

“What’s the scale?”

“6.6 million shares, over $300 million.”

“Which broker?”

“JP Morgan.”

“Go there immediately and tell them to hand over the transaction records!”

“Yes sir!”

The investigative net of the SEC and FBI, America’s top organizations, was closing in.

* * *

The FBI moved.

This meant one thing to the market.

“JP Morgan’s desk informed us that recall requests came in for 3 million shares.”

NextMove could collapse.

Naturally, investors holding the stock began dumping it on the market.

Those who had lent out shares also had no reason to bear the risk.

They naturally requested recalls, and JP Morgan’s desk asked KH Capital to return the shares.

“What’s the deadline?”

“They say they can hold it off until tomorrow, but beyond that would be difficult. However, they said the interest rate needs to be raised to 50 percent.”

50 percent annual interest rate.

They were essentially demanding a premium.

For normal stocks, the rate would be within 0.5-3 percent.

NextMove had a 15 percent annual rate because it was a surging stock.

The moment this became 50 percent, it meant one thing.

“JP Morgan has also judged NextMove to be dangerous.”

“The FBI investigation is scary after all.”

Now was the moment of choice.

The current stock price was at the moment of whether it would break $20 or not.

Normally, they would definitely choose to pay the premium and maintain the position.

But Kang Hyeon saw something different.

“Accept the recall request and begin purchasing shares in the market. And we’ll also gradually close out the remaining positions.”

“Understood! Beginning share purchases.”

A decision that didn’t align with market logic.

But this time, Seongwon didn’t hesitate and began purchasing shares.

Watching him place orders, Kang Hyeon smiled.

‘I guess he’s adapted now.’

The hesitation had disappeared from him.

I watched him faithfully carrying out his operator duties, then shifted my gaze to check the monitor.

‘It’s turned gray. That means it’ll continue sideways trading for a while.’

The blue color that had been emanating from NextMove had changed to gray.

This meant one thing.

The price would move sideways.

That’s how stocks originally worked.

‘The FBI investigation has started, but it’ll take at least a year until indictment. So the price will move up and down while falling.’

There was no reason to risk current profits on a case whose outcome was uncertain.

‘Should I start negotiating the CDS as well?’

It was the perfect timing to transfer the CDS again.

Kang Hyeon returned to the Executive Office and picked up the phone.

-Yes, this is Lee Jong-hyeok.

“This is Kang Hyeon. I’d like to negotiate regarding the NextMove CDS.”

-Ah! I was actually going to contact you about that matter. I heard people from Headquarters are coming in today for negotiations.

I had expected this to some extent.

With CDS negotiations, the more rounds there were, the bigger players the other side would send out.

‘I didn’t expect Headquarters personnel to come out for the second negotiation, but it’s such a big case.’

This was also within the expected range.

-Are you available today by any chance?

“Yes, I’m available. Where shall we meet?”

-If it’s alright with you, let’s meet outside. We’ll send a car from our side.

“Understood.”

I could leave the trading to Kwangho and Kim Seong-won.

I readily accepted and waited, then took the car Lee Jong-hyeok sent.

The destination was Shilla Hotel.

I met Lee Jong-hyeok there and moved to the Suite Room.

What was waiting in the luxurious and spacious room was.

“I’m Richard Blake from JP Morgan Chase. I serve as Managing Director of Brokerage.”

This was…

Outside the expected range.

* * *

Managing Director was equivalent to an executive managing director in South Korea.

It meant an executive representing a field or region.

I never expected such a big shot to personally come to South Korea for the second negotiation.

I glanced over at Lee Jong-hyeok.

Every expression and movement looked difficult for him.

Well, it wasn’t even his direct superior, but a top executive from Headquarters had personally made the trip.

It was natural for him to show such a reaction.

‘Honestly, I’m not particularly nervous though.’

I was different.

He was a business partner anyway, and I was in the superior position now.

NextMove had collapsed and the CDS value had skyrocketed.

There was nothing to be intimidated about.

Richard was also intrigued by Kang Hyeon’s reaction.

‘Most people who meet me for the first time either get nervous or put on airs. It’s one of the two. But this man is different.’

He wasn’t trembling, nor was he putting on airs.

He was just silently watching him.

As if to say, if you have something to say, speak first.

‘He knows his position exactly.’

Such a reaction came when this side had to bow their head.

It meant the man named Choi Kang-hyeon knew he was in the superior position.

‘Then I should bow and go in.’

Clack!

Richard, who had set down his teacup, opened his mouth.

“I’m pleased to meet the CEO of KH Capital who left two impressive trades in person like this.”

“I’m also honored to meet a Director from JP Morgan in person.”

After a brief greeting.

“The reason I personally came to South Korea is to purchase the CDS you currently hold.”

He brought up the main point.

What both sides wanted was clear anyway.

There was no reason to hide it.

“The CDS you set up is for 370 million dollars. You set it up at a very nice timing. It was perfect timing, respectably so.”

At first glance, it could have sounded sarcastic.

But from his tone and eyes, I could tell he was speaking sincerely.

“Thank you.”

“I was just stating facts. Anyway, the value of this CDS has skyrocketed in the current market. NextMove is now no different from a candle before a typhoon.”

He was right.

The WSJ exposé.

The FBI’s official investigation launch.

On top of that, incidents of the CEO being arrested at the airport happened in succession.

This was virtually no different from admitting to crimes.

To lay out all the cards like this.

I thought he was an interesting fellow.

But his main point was just beginning.

“However, it will take quite some time before NextMove goes bankrupt.”

CDS was a contract where you could only receive money when the company went bankrupt.

And that money was settled only after it was confirmed how much was recovered from liquidating the bankrupt company.

In other words, time was needed.

Before that, the CDS value was only profit on paper, not actual profit.

Richard clearly pointed out that aspect.

And Kang Hyeon was also considering this aspect.

“Before that, I can leverage more from banks using the book profit as collateral, so there’s no problem with fund management.”

There were many ways to convert it to money even without having the profit in hand.

One of them was taking out loans using the CDS value as collateral.

Such products weren’t available at commercial banks, but that wasn’t a problem.

Banks were originally places that would provide loans with collateral if they judged something to have value.

And this answer was exactly what Richard wanted to hear.

‘I was wondering since this was his first time dealing with CDS, but he really wasn’t a shallow man.’

He wasn’t simply a man with just a beast’s heart.

He was clever and strong.

Such a man would show even more remarkable performance in the Financial District in the future, creating expectations.

There was no need for further tug-of-war with someone he wanted to continue building relationships with.

“Let’s do it this way. The current CDS spread is set at 38 percent.”

“It’s risen quite a bit.”

“That’s right. At current value, it’s 126 million dollars.”

The CDS that was bought with a 20 billion won premium was now worth over 100 million dollars.

But CDS wasn’t traded this way.

Richard also knew this, so he immediately brought up the main point.

“As you know, the recoverable amount from a venture company like NextMove is about 10 to 15 percent. In terms of amount, that would be about 315 million to 333 million dollars.”

“Yes, I’m well aware. But that amount can only be received after the company goes bankrupt.”

“That’s correct.”

“Now let’s get to the main point. What price does JP Morgan want to purchase at?”

This was the important part.

JP Morgan was purchasing CDS while the company hadn’t gone bankrupt yet.

There were several reasons for this.

JP Morgan itself might have invested in NextMove or there could be traders who held large long positions.

In that case, CDS would be a very attractive card for hedging purposes.

And another thing was that JP Morgan could afford to wait until companies like NextMove collapsed.

In other words, they were trying to buy because they had calculated they could purchase CDS cheap and collect expensive returns.

If a high-ranking executive like Richard had come this far, the calculations must already be finished.

Kang Hyeon waited for the price to come out of his mouth.

“The price we want is…”

Finally, a price came out of Richard Blake’s mouth.

“200 million dollars.”

It was the moment when a 20 billion won bet would return as 280 billion won.

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This chapter was translated by Lunox Team. To support us and help keep this series going, visit our website: LunoxScans.com
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