What's wrong with me being a rich man?

Chapter 674 Became Famous (4k)

In the third week of May, silver prices accelerated their decline as well-known investment banks such as Deutsche Bank and JPMorgan Chase were implicated in manipulating the silver market.

At the beginning of the month, silver prices surged to $18.01 per ounce, continuing the upward trend from April. However, as the Federal Reserve made a speech in the first week that raised expectations for a June rate hike, silver prices began to fall. When BaFin revealed that a well-known short seller was involved in the investigation, the brief rebound in silver prices immediately lost support and fell directly below the $16 per ounce mark.

Guo Shanfeng merely used the evidence of silver manipulation as a bargaining chip for his own protection. Neither Yu Xing nor Guo Shanfeng needed to stand up and confront the investment bank under investigation, even though... the other party had already begun to accuse Guo Shanfeng of trying to manipulate the market with evidence that had no legal validity.

Of the three institutions named this time, Deutsche Bank remains silent, Scotiabank, following JPMorgan Chase, has come forward to refute the investigations by BaFin and multiple US departments, and Guo Shanfeng remains a target.

Scotiabank's Chief Risk Officer, Hart, became the first person to give a formal media interview and criticize the investigation.

"So-called market manipulation is just a normal means for institutions to provide liquidity to the market, and traders canceling orders is a reasonable adjustment in response to market changes."

“After receiving inquiries from the CFTC, we established an internal investigation team to review whether there were any violations by individual traders. However, Scotiabank absolutely did not manipulate the silver market.”

"This is nothing more than a tactic by Guo Shanfeng to suppress the stock price of investment banks, or it may just be a charade used by Yu Xing to exonerate himself."

"He is a profit-driven short seller and a criminal suspect under investigation. Isn't it an obvious choice who to believe?"

"Yu Xing must be disappointed. Our stock price has not suffered any setbacks, and his short-selling dream has been shattered."

Hart attempted to attribute the incident to a short-selling attempt by a mountain peak.

The CRO's responsibility is to oversee the company's risk management and ensure compliant operations. His statement is quite ironic in the eyes of insiders, but attributing the motive to the short-selling king is a good way to deflect attention.

JPMorgan Chase's legal counsel, Stacey, issued a legal threat after Hart: "It is clear that Yu Xingzheng is facing several lawsuits, and he should know what he is doing. I don't have his phone number, but a letter from our lawyers will soon be on his desk. If we really have violated the rules, it would have been investigated years ago. This is just a trick by an Eastern short seller."

Stacey's statement was indeed true.

This is not the first time the silver market has been questioned in recent years. The US CFTC held a hearing on silver manipulation as early as 2010, when a witness who reported JPMorgan Chase was involved in a hit-and-run accident the day after the hearing ended.

In 2014, the CFTC's investigation ended with the announcement that no wrongdoing was found.

Two years later, the old story came up again. The evidence that Mike and others had secured was an important breakthrough. However, BaFin and the CFTC faced a multi-faceted and systematic defense from investment banks.

Yu Xing was quite familiar with the rhetoric discussed by the legal team, because... Guo Shanfeng was actually doing the same thing. The difference was that Yu Xing was in China, which added an extra layer of legal protection, but the ultimate goal was to force the regulators to settle.

One of the reasons why executives like Hart and Stacey are so confident is the evidentiary challenges posed by the massive amounts of transaction data, and the fact that they can constantly question jurisdiction and the legality of evidence, consuming regulatory resources and prolonging the investigation period.

Two years ago, the CFTC accessed 10 transaction logs from the past four years, but now it actually faces much more transaction data. Its precious metals division only has a few dozen investigators and has to handle multiple cases, making it difficult to achieve a breakthrough quickly.

At the same time, the CFTC does not have the power to compel traders to testify and can only rely on voluntary information provision. A breakthrough in this area would require the judicial authorities to have the power to compel evidence collection.

Yu Xing was initially puzzled by the US side's request for Guo Shanfeng to handle the traders' lobbying and defection, but after intensive research in the past few days, he understood the reason behind it.

Liu Wanying has recently been working with a hedge fund. She thought that with a tainted witness like Mike, the matter would be settled directly. However, she did not expect the investment bank to be so firm, so she became somewhat worried about the settlement that Mountain Peak reached with BaFin and the SEC.

If things aren't resolved, will there be further setbacks in the reconciliation process?
"It shouldn't be a problem in Germany. Firstly, we have Wilcard, and secondly, we've secured funding. As for the US, we've actually helped many of their departments collect a lot of fines, so it should be fine too." Yu Xing gave a reassuring answer and then added, "The foundation is helping to research the detection system. It's still being tested, and they say it will be ready soon."

Liu Wanying looked a little confused: "Foundation? Which foundation?"

Yu Xing replied, "The one about deep learning, it's DLF, the one that Andrew Ng came from."

Liu Wanying was completely bewildered, never expecting to be connected to the DLF Foundation: "How come there's a detection system? Isn't this a huge leap?"

“The investment bank’s transaction logs are just too massive. When Mike handed over the evidence he had, it was very difficult for them to verify it because they needed to retrieve the corresponding data at that time,” Yu Xing explained. “When BaFin and the others flew over to talk, they also mentioned this matter. I thought that the current breakthroughs in deep learning might be able to help, so after asking them, we got started.”

"DLF and silicon carbon data together studied a model called 'SilverSpoof,' which should be more accurately called the COMEX precious metals high-frequency manipulation intelligent detection model. The data was purchased directly from Bloomberg and CQG through the open market."

"The current test results are consistent with the evidence we have, so we can basically confirm that it has run successfully."

Yu Xing's idea came to him on a whim, but the development of deep learning is indeed very fast. Just this March, AlphaGo defeated Lee Sedol in Go. According to the foundation that received the task, the LSTM, time series models, and unsupervised anomaly detection required in this area are all relatively mature. The only challenging task is cross-domain integration and innovation.

Self-encoders like AutoEncoder and Isolation Forest have already been commercially used in medical fraud and credit card theft.

Liu Wanying tried to understand: "So, this thing can detect fraudulent transactions by investment banks?"

“Yes, they say it can detect fraudulent transactions, as well as tiered order placement and fixing price manipulation,” Yu Xing replied.

Liu Wanying asked doubtfully, "Will this really work?"

Yu Xing said earnestly, "Its timestamp can be accurate to milliseconds. You have to trust technology. I was caught by technological advancements. What's there to doubt?"

The exposure of the mountain peaks is also partly due to technological advancements.

Upon hearing this, Liu Wanying couldn't help but chuckle: "I'm truly impressed. Okay, in that case, could the foundation develop a tool specifically for our needs in crossing mountains?"

Yu Xing didn't take this as a joke. After thinking for a while, he said, "There is a specific need, specifically in the silver market. I think it has potential, but we definitely can't just mention it in general terms. We probably need to study it in conjunction with specific clues."

Liu Wanying brought up a recent situation: "Can it be used on Wilcard's side?"

“Wilcard probably doesn’t even need high-tech research. Their on-site visits to Indonesia and Southeast Asia revealed that there are no such subsidiaries at all; they’re all fake,” Yu Xing laughed. “Well, we can’t use the information from Bit either.”

Zhao Shuo and Song Yufeng have made preliminary progress in their research on Vilkader, identifying it as... fake.

This company's methods of fraud were equally unsophisticated, relying solely on its network of power. Liu Wanying nodded, then, thinking about the research conducted by the DLF Foundation, couldn't help but shake her head: "You guys are really something, managing to do something like this..."

"To drive technological progress, we must of course use advanced technology." Yu Xing smiled slightly. "You see, the development of Silicon Carbon Group requires technology, the algorithms of Silicon Carbon Data also require technology, and now even crossing mountains requires it. What we are building is a technological complex."

Liu Wanying scoffed: "You shouldn't say that to me, you should say it in the stock market and see if you can make the stock price rise back to the issue price."

Silicon Carbon's share price has rebounded due to the easing of the investigation, but it has not yet reached the issue price of HK$75.56.

Yu Xing remained calm: "Stock prices fluctuate. The ChiNext board is ultimately a small pool. We have increased our production capacity this year, and our performance will get better and better."

The shareholders of silicon carbon are quite patient, after all, the domestic new energy market is unique.

The model developed by the DLF Foundation in collaboration with Silicon Carbon Data has not yet been delivered to regulatory agencies; it serves only as part of the evidence.

Lingang has remained silent, but tainted witness Mike has been exposed.

It's unclear at what point the information was leaked, or perhaps the institutions themselves were leaking information, but the revelation of the identities of the former JPMorgan Chase trader and the current Deutsche Bank trader immediately made the market realize the truth.

No wonder the evidence in this regulatory investigation seemed quite compelling; it turns out he was a double witness.

Mike was somewhat alarmed by the exposure of his identity. After consulting with the mountain peak, he ultimately adopted their advice and decided to testify against the two employers in a more public manner.

However, before he could take any concrete action, he was shot while out on May 23.

Upon hearing the news of the shooting, Yu Xing fell silent.

Good grief, I guess I'll be stuck in Shanghai forever...

Mike was shot in the chest by a mysterious gunman and is currently receiving treatment in the hospital. This situation is even worse than the hit-and-run incident that befell the witness a few years ago. After the incident was exposed by the media, German police said they would do their best to track down the killer.

As for where the murderer came from...

The allegations are highly suggestive but lack concrete evidence, and international social media platforms such as Twitter and Facebook have reacted strongly, with many condemning the investment bank suspected of being behind the attack.

JPMorgan Chase's legal counsel, Stacey, denied the moral accusations on Twitter, insisting that the shooting had nothing to do with JPMorgan Chase.

However, Mike survived after a night of emergency treatment at the hospital, but he will definitely be unable to attend the hearing for the time being. Fortunately, the colleague he persuaded to turn against him was also secretly protected immediately.

Many people on Twitter are outraged by this situation, and some have even called on the short sellers to keep a close eye on the stocks of the investment banks involved in the future.

Yu Xing certainly couldn't respond to this. The investment bank's stock price hadn't moved at all these days, and such investigations are often protracted and might just come to nothing again.

However, the SilverSpoof model, jointly developed by the DLF Foundation and Silicon Carbon Data, was officially sold to BaFin and CFTC for a symbolic price of $1 on this day.

BaFin, like a sieve, quickly found sources willing to communicate with the media, or perhaps this is a tactic used by regulators to exert pressure through public opinion.

"Guoshanfeng has developed an information retrieval system for silver market data. BaFin has combined this with information from the open market and identified anomalies."

"At this point, although I don't want to say it, I do have to point out one thing: you can distrust the investigative capabilities of BaFin and the CFTC, but you must trust the retrieval capabilities of the short-selling king."

"Perhaps this is an important reason for the series of successes achieved by the King of Short Sellers in the past."

The matter of investment banks manipulating silver prices is not particularly interesting in itself, but because it involves the secrets of the short-selling king and the public outrage over the shooting of a tainted witness, the so-called "SilverSpoof" immediately became famous.

BaFin officials confirmed the news in a media interview, immediately making the technological innovation of deep learning famous. However, this time it was not only because of the reputation of the "King of Short Sellers" that it attracted the interest of the scientific research field, but also made Scotiabank and JPMorgan Chase quite suspicious.

Hart, who had previously spoken out, retweeted the news and sarcastically commented: "What did I just see? Is Overmountain a scientific institution? The market shouldn't be manipulated by Overmountain's news."

This time, Yu Xing finally gave an informal response: "We must believe in technological progress; that's how the mountain peak was discovered."

Hart was genuinely surprised when he saw the comments from the Eastern short sellers after a while. He then inquired about the situation at his own company, only to be told that BaFin and Guo Shanfeng were merely creating pressure.

He interacted remotely: "That's because Guo Shanfeng wasn't wronged, but JPMorgan Chase had already passed the review, and we at Scotiabank have always been trusted by the market and our clients for our professional capabilities."

Yu Xing didn't respond to Hart; the facts will speak for themselves.

However, while those unfamiliar with the technology were still observing and pondering the interaction between the short sellers and investment bank executives, several people from Baidu Research Institute made a decision.

Yu Kai left, and Andrew Ng left. The former started his own business, and the latter joined DLF. The technical talents who had just emerged from the Baidu medical advertising incident were originally thinking about their future.

"You're going to DLF? Weren't you going to start your own business before?"

"I'm not starting anymore, I'm going to work for CEO Yu at DLF."

"why?"

"Because he's quite humorous."

The big short seller is not only humorous but also pragmatic. He seized the opportunity presented by technological advancements and instead channeled those advancements into his work on overcoming challenges. Clearly, compared to the outdated Baidu, he is at least a progressive individual.

(End of this chapter)