So this is kind of a funny or sad story, depending how you look at it. A guy was trading a pharma stock on E*Trade decided to short a small company called KaloBios Pharmaceuticals which was trading at a bit over $2 per share. Little did he know, the infamous Martin Shkreli who jacked up HIV drug prices after he bought a cheap brand, decided to make a huge investment in the company, sending the stock price soaring.
The result? The guy's short position did not have stop-order and the margin call was not able to be filled, leaving his equity on his account massively in the red. His broker, E-trade, is of course regulated and well known. But that doesn't change this poor guy's fate: he's got to pay up.
This is one great argument for using unregulated Bitcoin exchanges: they won't be able to chase you down for any negative balances, in fact you can't even generate a negative balance. Sure your ability to have recourse in case of a dispute is harder when you're dealing with an unregulated exchange, but then you at least are able to access leverage and not suffer such grave consequences if the market moves violently against you. The same thing happened to FINRA regulated FOREX brokers like FXCM when the EUR/CHF peg was broken by the SNB.
And they say bitcoin trading is risky?
This is one great argument for using unregulated Bitcoin exchanges: they won't be able to chase you down for any negative balances, in fact you can't even generate a negative balance. Sure your ability to have recourse in case of a dispute is harder when you're dealing with an unregulated exchange, but then you at least are able to access leverage and not suffer such grave consequences if the market moves violently against you. The same thing happened to FINRA regulated FOREX brokers like FXCM when the EUR/CHF peg was broken by the SNB.
And they say bitcoin trading is risky?
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