Insider Trading at Coinbase

Yes, it's literally their job to account for situations like this. They failed. Pointing out how insane the situation was only points out how poorly they predicted what might happen with private information they still haven't shared publicly. If they can't account for the bets placed then we don't have functioning markets. They knew what the short interest was, they knew what the options chain was, they have data about trades the public can't even see. There were multiple traders pointing towards a potential short squeeze in GME going back well into 2020, so if they could see it why the fuck couldn't the DTCC?

Your stance is "their job was hard therefore it's not their fault." That's quite frankly batshit insane when we're talking about the stock market which is an enormous functioning part of our economy. Yeah man, I'm concerned they don't know what the fuck they're doing because they've already proven they don't. If they didn't care they wouldn't have changed the collateral requirements - you're contradicting reality with your argument.

You can have the last word, I'm not going to respond any further.

- A clearinghouse cannot halt a market

- A clearinghouse's job is to ensure that trades settle, which requires adjusting collateral, which is exactly what they did

- A clearinghouse does not honor a trade, the buyer and seller (via their brokerage) do; if there's an increased risk of the trade not being honored, the clearinghouse raises collateral requirements

- DTCC controlled the situation the best they could from their end by raising collateral requirements, which is basically all they can do

- A market can be functioning perfectly fine even if clearinghouse collateral is at 100%

- A clearinghouse doesn't definitionally know what the outstanding short interest is; short positions are on broker's books and it is the broker that reports that data to FINRA, not the clearinghouse

- A clearinghouse preemptively "dealing with" with all outstanding options positions (or any position, for that matter) that they (there is not just one clearinghouse) know about boils down to collecting 100% collateral

- The OCC clears options, the DTCC (by way of the NSCC) clears equity; the data that the DTCC has regarding options is presumably very limited

- A clearinghouse is not going to require 100% collateral because somebody on the internet believes there's going to be a short squeeze

- I don't exactly know what you think you think they "don't care" about, but if you're implying that a clearinghouse requiring high collateral to deal with brokers not being able to make good on a trade because of activity on that broker's books is somehow rigging the market, you've completely lost the plot

I think you misunderstand what a clearinghouse does.

It is a type of fraud because the insider is selling you a stock at a price they know is wrong (or buying it from you). They are hiding from you information that they know would affect your decision to trade.

Further, imagine that I as a CEO (or more realistically, executive team) buy a short contract on my own company's shares (through intermediaries, so people don't find out I did it), and then intentionally tank the company to force the stock price to go down at a later date. Wouldn't this be extremely similar to insurance fraud?

> If I own shares of company $x and an insider sells their shares of $x causing the stock to plummet, I do not lose anything. I still own those stocks, they’re just valued more accurately.

Again, you're assuming that the insider would trade at the new price. This is a completely unfounded assumption.

If I'm an insider and know that a company whose shares are currently worth 100$ will announce 0 revenue two months from now, I will sell my shares at 100$ to someone who still believes the company is doing ok. Depending on how big of an insider I am, I will have to do this carefully so as to keep up the ruse as long as possible - hopefully all the way to the announcement, when the stocks will plummet to 10$, and all the dupes who I got to pay me 100$ will be left holding the bag.

Now of course, if all insiders start trading away their stock, the price will start dropping, so maybe they won't be able to sell all their shares at 100$, maybe the price will settle at 90$ or 80$ or even lower. But if the market has been told the company is doing well in terms of sales (even though the insiders know its not) they will not allow the price to drop as low as it should.

Congress changed the regulations, not the regulators.

I really have no idea what examples you're thinking of.