HSBC Indicted for Naked Shorting in South Korea

HSBC and three of its traders in South Korea have been criminally charged with illegal naked short selling, amounting to around $12M.

HSBC, a globally renowned investment bank and three of its traders have faced criminal accusations. Prosecutors in South Korea brought these charges.

The claims against HSBC, an affiliate of Ripple through its relationship with the technology company Metaco, amount to 15.8 billion won, or around $12 million.

This is a significant development because the allegations are that they engaged in illegal naked shortselling. Between August and December 2021, the defendant engaged in activities that included the short-selling participation of shares from nine different publicly traded companies, one of which was Hotel Shilla Company.

The defendant neither owned the shares nor borrowed them for the purpose of selling them. As of April 2021, South Korea has implemented strong legislation to combat illicit short-selling activities.

The enforcement of these laws led to the first action against HSBC in South Korea. The Capital Markets Act stipulates that those who are found to be guilty of naked short selling may be sentenced to a prison sentence of up to one year or are subject to a fine that is three to five times the amount of benefits gained from engaging in such activities.

We will also investigate BNP Paribas, a prominent player in the financial sector, for short-selling stocks worth forty billion won without having previously taken out any loans.

The French bank and HSBC faced hefty fines totaling 26.52 billion won for violations of naked short-selling. These were the most significant fines ever levied in South Korea.

The Korean authorities have demonstrated their dedication to enforcing the new regulations and maintaining the integrity of the market’s forward movement.

HSBC Venture into Digital Asset Custody

HSBC, on the other hand, has stated ambitions to expand its services into the digital asset area, even though these legal issues are being faced.

Through a partnership with Metaco, a startup that is affiliated with Ripple Labs Inc., HSBC intends to facilitate the provision of custodial services for tokenized assets.

HSBC’s Orion platform, which includes a protocol for tokenized gold and uses blockchain technology to represent ownership of physical gold in the form of digital tokens, is the project’s target, which is aimed at developing the Orion platform further.

This is a course of action that HSBC is taking, following the general trend of traditional financial institutions to use blockchain technology and digital assets.

An increasing number of institutional players are showing an interest in the digital asset market, which has increased the need for custodial services.

The entry of HSBC into this industry is a clear sign of the potential for growth in this field. It is anticipated that the market for institutional cryptographic custody will reach over $10 trillion by the year 2030.