For those of us not in the know, what is so special about today regarding WSB? I know there's a feud with short sellers going on, but I haven't been following the details.
Someone went from 50k to 50M by igniting a short squeeze. All eyes were on the WSB subreddit, and discord server. Now both are private or offline.
No one has any chance to coordinate now. Discord’s action is effectively market manipulation in a literal sense, because this is certainly going to affect the market.
I’m curious why the sub went private though.
EDIT: I regret my phrasing. I didn’t mean this was illegal market manipulation, just that discord is literally manipulating the market by cutting off one of two primary coordination channels.
But they’re within their legal rights to do so, of course.
Market manipulation is not anything that "affects the market." That definition would cover pretty much any and all behavior. In this case Discord is not trading securities, is not telling any one else to trade securities, has nothing at all to do with securities.
If I run an email service and find that a user is running a pump-and-dump scam through it, do you really think I shouldn't be able to shut down their account?
Yeah, I didn’t mean it in the legal sense. It was just interesting that this decision can cost certain people millions of dollars. But that’s true of many actions in the world, as you say.
"Market manipulation" is what we call it when you affect markets illegally. If it's not illegal, it's not manipulation. For example, if I buy a bunch of stock in a company it will usually raise the stock price. That affects the market but is not illegal and is not manipulation.
> "Market manipulation" is what we call it when you affect markets illegally. If it's not illegal, it's not manipulation.
This is backwards. The label "manipulation" is applied (or not) retroactively based on whether something was determined to be illegal or not. It's not something you can know in advance; two copies of the exact same action might be judged differently.
>If I run an email service and find that a user is running a pump-and-dump scam through it, do you really think I shouldn't be able to shut down their account?
Yeah, I kinda think the SEC should be in charge of whether you're doing a pump-and-dump or not.
They considered making it private [and did briefly] during previous fiascos. At the time there were threads by the mods in which you can post so you are included but the alternative was by post history. It's very possible they've left e.g. the 10% most active posters in the sub and can still coordinate to an extent.
Edit: That seems to be the case, as their new message is
"WallStreetBets is under in tents load and is only for approved submitters. In the meantime, please enjoy some spaghetti. https://www.youtube.com/watch?v=gW1GR7BECq4"
Edit2: Now changed to "We are experiencing technical difficulties based on unprecedented scale as a result of the newfound interest in WSB. We are unable to ensure Reddit's content policy and the WSB rules are enforceable without a technology platform that can support automation of this enforcement. WSB will be back.
Before it went private I popped in and saw a thread where they were debating and coordinating what to do b/c they apparently had big issues today with bots and so many messages. Earlier I saw a few comments about downvoting bots all day.
They were debating whether it would be worthwhile and feasible to limit posting to people who had commented in the reddit 6 months prior as a filter.
My rough understanding is that the sub is required by Reddit admins to perform certain actions related to every submission (and even maybe every comment) which, due to API limitations, they could no longer do automatically.
Add this to the mix. The major brokerage firms go down. When users are able to login they receive messages they can no longer make call options on GME and are only allowed to sell.
> Discord’s action is effectively market manipulation in a literal sense, because this is certainly going to affect the market.
It certainly will have an effect, but I'm not sure it meets the definition of "manipulation". I think (though am not certain) that the manipulating party would need to have a stake in the market asset for manipulation to apply. Many definitions (though not investor.gov) imply that personal gain is a requirement. No doubt there will be a legal case made here.
They've officially ticked off rich and well-connected people, so regulators are coming to shake the tree branch (I have no idea whether what they're doing is illegal or not) and the platforms want to distance themselves from that ASAP.
Incredibly naive to think that WSB itself isn't filled with rich and well-connected people. In its early days, WSB was almost entirely a bunch of rich wall street traders with extra tens/hundreds of thousands to spare on crazy bets. Nowadays, it's one of the largest subreddits on one of the largest websites in the world. WSB isn't some niche gathering of "average joes" - all of the major wall street firms monitor it, and it wouldn't surprise me to learn that many of them downright manipulate it via astroturfing.
I’m convinced that this is just a “win the battle, lose the war” moment. I can imagine well funded financial institutions doing whatever they can to make sure this doesn’t happen again and if they can, punishing those who took part.
I agree with you regarding the war between populists and establishment, but I don’t think Trump fits into that as more than a cataclyst. The Obama story was the same: Hope and Change Populism.
Trump is business establishment through and through and has managed to wake a populist movement for his own enrichment.
He (and his sycophantic cronies) were (and continue to be) very much part of the “I got mine” greed establishment.
Instead of answering to the Population, it seems that Trump and his crew care only for self-enrichment. How he managed to capture the imagination of a Populist movement is indication of the total lack of alternatives.
“If big business is on your side, everyone on TV is on your side, Hollywood is on your side, every university faculty is on your side, and almost every union is on your side, then you are not The Resistance.” -Apocryphal
His companies have been battered, protested, and boycotted. He also donated his entire presidential salary. No one asked him to. WSB bets top posts are literally AOC, a democrat congresswoman, supporting them right now and somehow someone is still finding a way to blame Trump?
You're right, I read that Trump started a populist movement for his own enrichment and assumed he was relating that to the WSB populist movement getting started, since I just read an article stating that.
I definitely was not blaming Trump for this situation.
If I was saying anything about the relationship between Trump and WSB at all, I was ascribing the opposite blame: populist movements like WSB explain Trump.
I'm incredibly naive to think something I didn't claim, allude to, or comment on at all? Rich and well-connected people can tick off other rich and well-connected people.
I have an alternative theory: the events of three weeks ago in the USA made these platforms much more trigger-happy than usual. Where before they might have let it slide, nowadays (and for a while) they will want to take no risks.
However, with each such decision that happened recently (and I swear it's something of a third high-profile ban after the capitol thing), they're angering ever larger groups of people all across the political spectrum. I feel this will bite them hard. This is going to be interesting to watch.
As of now there have been few repercussions for turning the knob up on censorship. Power begets power, and we'll see whether or not it burns them in the end.
Acting alone it’s not inherently illegal. Real question is whether pooling your strength (ie assets) with others to force a squeeze is illegal collusion and market manipulation.
In particular, it's hard to see a short squeeze as market manipulation, which is why nobody has been penalized for it.
What is a hedge fund except more explicit coordination of many people's money on a much greater scale? The classic example of Porsche's squeeze on VW stock was Porsche's management coordinating many people's pooled assets.
Not sure what the "narrative" you're projecting on me is? The administration literally announced they are monitoring the online stock pumping situation. That's a pretty fair motivation for Discord to drop a stock pumping server.
How does that reconcile with literally hundreds of other servers involving stocks that are still up?
Including literally the WSB discord that used to be linked in the subreddit!
> To be clear, we did not ban this server due to financial fraud related to GameStop or other stocks. Discord welcomes a broad variety of personal finance discussions, from investment clubs and day traders to college students and professional financial advisors. We are monitoring this situation and in the event there are allegations of illegal activities, we will cooperate with authorities as appropriate.
That server was vile. And not because of WSB tongue-in-cheek "retard" "gay-bear" stuff, just actual hateful usage of racial slurs actual, homophobia not just based on using certain words, and more
Your narrative that this is a response to "stock pumping" is completely off base.
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Edit reply:
There's proof for my side... Discord said they were banned from getting tons of reports.
There's no proof for a narrative where Discord self-censors over an intentionally vague tweet about social media and stocks.
"We deleted the server to not implicate ourselves in a tool of securities fraud" would have been a pretty damn good reason by itself... no need to lie about that.
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Edit reply:
If enough upset people crying over their banned cesspool downvote you, you can't reply to comments anymore :)
I guess in the face of your lack of even "proof", I'm brazenly suggesting that having an admin saying ni*er hundreds of times will get your server banned.
Reply-reply (not sure what the purpose of the edit was?):
Clearly discord doesn't want to actively suggest illegal activity happened on their platform, so they're not going to state that as their reason.
I guess in the face of your "proof", I'm brazenly suggesting that this marks the first time in history a corporate PR department has lied about the company's motivations.
To be clear, the one banned is the only WSB discord server with an active connection to the subreddit. The other one is a legacy server run by a former moderator who was banned for using the /r/WSB for personal gain. It's much less active these days (although people are flocking to it now that the active one is banned). It's not like we're talking about two equal servers where one is offensive and one isn't.
This is ignoring the fact that during the most prominent times WSB experienced prior to this, including when they crossed 1M subs, that was the main discord server the subreddit was linked to.
The other server is (or was) 100% more tame, and at the time experienced more traffic than the one that was just banned (obviously this changed once the link was removed).
There was no way you were going to find a mod spamming the n-word, in fact people were regularly banned for using slurs.
I mean being founded by the guy who was running the sub, it was in line with the subreddit, edgy, but with nuggets of clarity and an understanding that it's possible to take things too far.
Obviously the answer is the large volume of eyeballs (or eardrums in this case) and attention on the server that was banned.
I'm not sure how you would know whether they were being genuine in their stated reason (unless you work for discord?) but obviously the timing strains credulity for many. There's no proof on either side here, so I'd prefer to stop arguing.
The details: a hedge fund decided to short retail stocks during the pandemic. They overextended with a naked short position against GameStop (that brick and mortar video game retailer) that exceeds not only the share float by a large margin but even the total number of shares in existence.
u/DeepFuckingValue on r/wallstreetbets discovered this a month or so ago, took out a $50k position, and let the rest of the sub in on it. That position is now worth $50M, a 1,000x increase.
Now there is literally no limit to the upside of a short squeeze. The price goes up high enough and the short sellers declare bankruptcy and liquidate their positions to cover the cost of purchasing shares. If they still come up short, then the same happens to the banks that lend to them . If that comes short, the brokerage must step up. At that point there’d probably be government intervention and a bailout. The WSB motto has become “we can stay retarded longer than they can stay solvent.”
According to a naïve view of the law, at least, that is correct. Far more likely there will be market outages and regulator shenanigans at undo the situation. Nobody is more of a sore loser than the establishment.
