Trade Wars

Teen TikTok Star Wants You To Trade With 500x Leverage

Uh-huh.
Photo-Illustration: Intelligence; Photo: @ TikTokInvestors / Twitter / Getty Images

Not even six months ago, Matt Lorion, who has over a million followers on his multiple TikTok accounts, posted a video apologizing for boosting a cryptocurrency called Mando, a Star wars– themed bitcoin imitation – think The Mandalorian – this turned out to be a scam. “I can’t even express how shitty I feel right now and how sorry I am for what happened,” said Lorion, a self-proclaimed millionaire who is now all 18, in his video. . “Thank you for your understanding. Something like this will not happen again.” The account recently documented a very dubious Monday schedule for a trader, a ridiculous claim about the benefits of NFT (followed by a pitch, of course), and a (grumpy) sign that bitcoin prices may have peaked. All are at the standard rate on the platform.

Lorion is far from a household name, but his change of shape as an expert in cryptocurrencies, financial markets, entrepreneurship, marketing and dating advice makes him a common figure on the screens of any TikTok user, even interested in the hectic culture lifestyle. . Now, just as federal regulators crack down on the darker corners of crypto and post-GameStop markets, he’s gone beyond tokens to push an even riskier bet: online trading through a Caribbean brokerage house. which allows investors to multiply the size of their bets up to 500 times. While far from the only person promoting get-rich-quick schemes on the internet, his reach in a medium often overlooked by regulators shows how difficult it can be to prevent the proliferation of shady financial advice. and aggressive arguments among uninformed investors.

“Every time I see Matt Lorion my eyes go up,” said the man behind @TikTokInvestors, a popular Twitter account that follows questionable financial advice on TikTok. He still works in finance and has requested to remain anonymous due to previous attempts by angry TikTokers to dox him. “This guy is notorious.”

Lorion, who recently graduated from high school in Massachusetts, has already spent much of his life riding some of the less famous ways to make money online. He started at 16 in drop-shipping, the practice of building an online storefront and profiting from arbitrage. Then there was Elongate, another joke token he boosted in now-deleted TikToks. Just days after saying he would do due diligence on the new crypto, he claimed he was again duped by the developers in another room he helped create and said he and his team had lost money on the case. (A group of people opened a chat room on Telegram to sue him, but ended up dropping the idea for reasons that are unclear.) Two months later, however, he posted a video of his move. in Miami, showing off his black speckled Tesla and red Corvette: “We’re going for a quick tour. I just bought this thing, what was it three weeks ago? I don’t know anything about gasoline cars, but it looks cool, it looks cool. It’s really cool. ”Thanks to a medium like TikTok, the success markers will be as visible as possible, especially if you are selling the achievement itself.

Lately, Lorion has turned into a guru of commerce. Gone are the videos about obscure crypto tokens, and in their place are clips of the curly-haired teenager explaining how to use technical analysis – i.e. guessing where the price of an asset may be heading in. based on current graphical patterns – to predict markets. It also seems to focus on a bigger game than just token peddling: trading itself. “Let’s say you want to trade, but you don’t have a lot of money,” he says over an ersatz Macklemore beat. The solution, he says, is leverage or trading with borrowed money. The company he’s pushing this time around is Bluwave, a brokerage firm that allows a leverage ratio of 500 to one on currency transactions, using as little as $ 10. (This means that for every dollar traders invest, they can borrow $ 500.) But there is extreme leverage for all kinds of other assets as well. According to the broker’s website, traders can borrow $ 200 per dollar to buy and sell indices, metals and “energies” and $ 100 per dollar for crypto. Individual stocks only have a paltry 20-to-one ratio. “If you want to ride the wave for better income,” Lorion says, “check out the link in my bio. Peace!” The danger here, which Lorion sidesteps, is that such extreme leverage also amplifies losses, so if the markets move even slightly in the opposite direction of the bet, a trader can be wiped out.

What remains of Lorion’s 43-second video are some major caveats. “Bluwave’s services and any information on this site are not directed to citizens and / or residents of the United States,” the company says in small white text at the bottom of its page. Under its terms and conditions, its accounts are not insured by the Federal Deposit Insurance Corporation, so if it goes bankrupt, traders might not be able to get their money back. It is unclear exactly where clients’ money goes, as the funds are “deposited with a liquidity provider, which is selected by Bluwave in its sole discretion,” although it does not say who it is. The per-trade commission structure is not straightforward at all, although it can cost up to $ 10 per trade. And unlike, say, a branch of Merrill Lynch, Bluwave’s physical presence in the world is elusive. It indicates its address in a business center on the island of Saint Vincent and the Grenadines where Wilfred International Services, a company that creates shell companies, is located. (For what it’s worth, Google’s hapless reviews point to a menagerie of different brokerage houses located at the same address.) Time will tell if all of this is enough to pique the interest of financial regulators.

Bluwave is far from being the only one to offer three-digit leverage ratios that will turn the heads of financial neophytes. But Lorion’s latest turmoil comes at a precarious time, with high-leverage trading for average investors being held back by both regulators and industry players. Margin trading – another term for leverage – has come under scrutiny, with federal authorities fining a crypto exchange on Tuesday for allowing retail traders to borrow money. money to exchange bitcoins. Bigger brokerages like FTX have generally reduced their margin limits (including lowering its highest leverage ratio to 20x), while Binance has stopped crypto margin trading against three of the world’s largest currencies and also limited leverage ratios.

So who is behind Bluwave? Lorion seems to be the only one to offer this company – other than a few mentions on YouTube, it hardly exists online. The company’s website is registered by a representative of an IT company called Red Acre, Ltd., but the Beverly Hills address that appears through a domain name search service does not exist. Lorion did not respond to emails asking him to talk about his career or the company, nor did representatives for Wilfred or Red Acre. Attempts to send requests for comment through BluWave’s website have repeatedly failed.

It is not known if Lorion himself has a stake in the business or how he got involved with Bluwave in the first place. But the man behind @TikTokInvestors – who has been roaming the platform for shady advice for over a year now – thinks Lorion himself could be quietly invested in the platform, and he points to the video itself. as a major clue. “Typically the way TikTokers gets paid is through affiliate links where they say, ‘I’m advertising. Here’s the social media stuff – go check it out, ”he said. “He doesn’t do any of those things. He says, “Go to the website and start trading. “