Chapter Summaries

Zhao Chen accepted a harsh HK$24 billion share-pledge deal to raise emergency funds for Era Vanguard, despite breaking Henglong's public promise not to pledge shares. The funds could arrive in one or two days, but Tesla's price was nearing the liquidation threshold and the short sellers might not give them time.

• Su Wantang, Chen Xi, and Zhang Qingxue arrived in New York and brought Zhao Chen the financing agreement they had secured from a Hong Kong family office.
• Zhang Qingxue explained that the HK$24 billion loan required Zhao Chen to pledge all 360 million of his Henglong shares, with Su Wantang and Shen Zhiyi pledging another 56 million shares.
• Chen Xi explained that the lender would restrict Henglong Capital's trades and require written approval for both reductions and additions to its positions.
• Zhao Chen accepted the deal, knowing the pledge would violate Henglong's public promise and could damage shareholder trust, but believing it was necessary to prevent Era Vanguard's Tesla and Nvidia positions from collapsing.
• Chen Xi said the funds could arrive in one or two days, while Zhao Chen noted that Tesla had fallen to $188, less than $10 above its liquidation threshold, and wondered whether the short sellers would allow them that time.

Tesla closed at $180, just above Era Vanguard's $178 liquidation line, as bulls fought off a day of heavy short selling. At a hedge fund gathering, an analyst explained that Era Vanguard could not easily sell its Nvidia stake without risking severe legal and regulatory consequences.

• Short sellers drove Tesla down toward $179.50, but buyers held the price up and the stock closed at $180.
• Shen Zhiyi noted the close, while Su Wantang saw that Zhao Chen remained tense.
• At the Explorers Club, an analyst questioned why Era Vanguard had not sold some of its Nvidia shares to cover its Tesla margin shortfall.
• The analyst said selling Nvidia could trigger short-swing profit recapture, SEC penalties over Era Vanguard's Schedule 13D, and renewed FTC scrutiny.
• The analyst concluded that Era Vanguard faced a dead end: selling Nvidia could bring greater harm, while holding on risked liquidation of its pledged Tesla shares.

Zhao Chen used newly arrived funds to buy Tesla shares and blunt the shorts’ attempt to trigger Era Vanguard’s liquidation, sending the stock sharply higher. With Era Vanguard’s stake now above 10%, he directed Zhang Qingxue and Lin Shicheng to prepare a Schedule 13D describing the firm as a passive, long-term strategic shareholder.

• On May 9, Tesla fell toward $178, but heavy buy orders at $178.50 absorbed the shorts’ selling and drove the price up to close at $188.
• Zhao Chen revealed that he had bought four million shares at an average price of $181.50, bringing Era Vanguard’s total Tesla holdings to 20.6 million shares.
• Chen Xi calculated that Era Vanguard now owned about 11.7% of Tesla’s shares, exceeding the 10% disclosure threshold.
• Zhao Chen told Zhang Qingxue to prepare the Schedule 13D with Lin Shicheng and state that Era Vanguard would not seek a board seat or influence Tesla’s management.

Zhao Chen strengthened Era Vanguard’s Tesla position by pledging newly bought shares, lowering the estimated liquidation threshold and revealing that the fund still had buying power. The move rattled the shorts, who realized their earlier assumptions were obsolete and decided to report the unexplained funding source to the SEC.

• Chen Xi reported that Era Vanguard had bought four million Tesla shares and Zhao Chen ordered 3.4 million of them pledged as additional collateral.
• Zhao Chen told Zhang Qingxue to file the Schedule 13D through the normal process, while Era Vanguard’s expanded stake and new pledge became public.
• News of the pledge spread across Wall Street, encouraging Tesla bulls and prompting institutional investors to reassess the stock.
• At the Explorers Club, the gray-haired old man and other short sellers recognized that Era Vanguard could keep buying and pledging shares, leaving them trapped between continued selling and costly covering.
• The gray-haired old man ordered his associates to report Era Vanguard’s unexplained funding source to the SEC.

Era Vanguard continued buying Tesla shares, forcing the Short-Selling Alliance to confront rising prices and growing distrust among its members. Tesla ended Friday at US$195 after a fierce battle around US$200, while Era Vanguard increased its holdings and the shorts entered the weekend uncertain about how much ammunition it still had.

• An analyst reported that Era Vanguard had raised its stake to nearly 11.7 percent, pledged another 3.4 million shares, and continued buying, making the shorts fear that whoever covered last would lose the most.
• Before Friday's opening bell, Tesla's premarket price rose to US$197 as Era Vanguard's aggressive buying pushed the stock above US$200.
• Short sellers flooded the market with sell orders around US$200, but Era Vanguard repeatedly bought shares and restored the price whenever it fell below that level.
• Several short positions quietly covered nearly twenty percent of their exposure, deepening suspicions among the alliance as the battle continued.
• Tesla closed at US$195 after concentrated late selling, while Era Vanguard accumulated more shares and the shorts remained unsure whether its supply of funds had run out.

Wall Street debated whether Era Vanguard’s buying could trigger a Tesla short squeeze, while an SEC complaint questioned the source of its funding. After Lin Shicheng explained the regulatory risks, Zhao Chen ordered the fund to file its Schedule 13D amendment and buy aggressively before any investigation began.

• Investors and analysts debated whether Era Vanguard’s Tesla purchases could force short sellers to cover, despite Tesla’s weak fundamentals.
• A nonpublic SEC complaint alleged that Era Vanguard’s funding might have come from improper offshore financing, and the news gave short sellers some relief.
• Lin Shicheng told Zhao Chen that an investigation could delay cross-border transfers and expose Era Vanguard’s funding strategy, but said the fund could demonstrate its money was clean.
• Zhao Chen ordered the second Schedule 13D amendment filed before Monday’s market open and directed Era Vanguard to buy Tesla shares aggressively before regulators acted.

Era Vanguard defended Tesla’s $200 price floor while building a large Nvidia position, then Zhao Chen agreed to stop increasing its Tesla stake after Elon Musk called him. By the end of May, the fund held 26 million Tesla shares and about 94.1 million Nvidia shares, leaving the short sellers to contend with its cross-holdings.

• Era Vanguard bought Tesla shares whenever the price fell below $200, keeping the stock in a narrow range while short sellers failed to break the support level.
• Era Vanguard resumed buying Nvidia and disclosed its growing holdings through frequent Schedule 13D amendments, prompting the market to recognize its ability to fight on two fronts.
• By the end of May, Era Vanguard had raised its Tesla holdings to 26 million shares at an average cost of about $256.70, while Tesla closed at $230.
• Elon Musk called Zhao Chen and asked him to stop increasing Era Vanguard’s Tesla stake, and Zhao Chen agreed that 26 million shares were enough.
• Era Vanguard added about 22.85 million Nvidia shares during May, bringing its total holdings to approximately 94.1 million shares, or 15.5% of Nvidia.
• Zhao Chen told Lin Shicheng that Era Vanguard would hold its positions and use its Tesla and Nvidia holdings to cushion each other against short sellers.

After Era Vanguard secured $1 billion by pledging its SpaceX shares, Zhao Chen used the financing and matching leverage to raise the firm’s Nvidia stake to nearly 18%. He then ordered Zhang Qingxue and Lawyer Lin to promise Nvidia that Era Vanguard would not buy, sell, seek a board seat, or interfere in operations for five years.

• SpaceX’s board approved Era Vanguard’s $1 billion financing, with Elon Musk signing the resolution.
• Zhao Chen directed Chen Xi to invest $2 billion in Nvidia, bringing Era Vanguard’s holdings to about 107.8 million shares, or 17.8%.
• Zhang Qingxue explained that the new purchase required an amended SEC filing and that the SpaceX financing had a traceable fund path.
• Zhao Chen instructed Zhang Qingxue and Lawyer Lin to tell Nvidia that Era Vanguard would make no further purchases, seek no board seat, avoid operational interference, and sell no shares for five years.
• Zhang Qingxue and Chen Xi warned Zhao Chen that the pledge surrendered Era Vanguard’s flexibility, but he said it would show Nvidia that the firm was a committed long-term investor.

As Tesla rebounded, large short sellers became trapped by their positions, while Era Vanguard paused its buying and faced accusations from Muddy Waters and Citron. The SEC requested more information about Zhao Chen’s funding chain, and he told Lin Shicheng to prepare a meticulous response as the short sellers’ pressure campaign intensified.

• Smaller hedge funds covered their lighter Tesla short positions, while analysts on CNBC said large short sellers were trapped and their alliance was likely to fracture.
• A Bloomberg alert reported that Era Vanguard had paused increasing its stakes, and a gray-haired short seller warned that Zhao Chen had already accumulated enough Tesla and Nvidia shares.
• Carson Block accused Era Vanguard on CNBC of using opaque offshore loans, and Andrew Left publicly questioned its filings and funding sources.
• A former SEC enforcement official said regulators had to investigate Era Vanguard’s large cross-holdings and pledged equity structure.
• Lin Shicheng told Zhao Chen that the SEC had requested supplementary documents tracing the May funding chain, and Zhao ordered him to prepare a precise, transparent response.

Zhao Chen faced the impending public exposure of his control of Era Vanguard, the fallout from Henglong Group’s share pledge, and the attention from his university and the public. He chose to disclose the funding chain, compensate Henglong Group, and prepare for the regulatory and social consequences.

• Lin Shicheng warned Zhao Chen that the SEC response would publicly reveal his control of Era Vanguard and expose Henglong Group’s role in its funding.
• Zhang Qingxue told Zhao Chen that Henglong Group’s pledge of 360 million shares would trigger a public announcement and likely regulatory scrutiny, while Shen Zhiyi raised the attention he would receive from Zhengfa University and other institutions.
• Zhao Chen ordered Lin Shicheng to submit the SEC response through normal procedures and decided to personally compensate Henglong Group 200 million Hong Kong dollars annually until the pledged shares were released.
• Zhao Chen asked Shen Zhiyi to quietly contact Zhengfa University and arrange any invitation as an ordinary Alumni Salon rather than a public event.
• Zhao Chen directed Zhang Qingxue and Chen Xi to prepare Henglong Group’s pledge announcement and an online board meeting for two days after they returned home.
• Zhao Chen instructed Lin Shicheng to update Era Vanguard’s amended Schedule 13D filing and prepare a complete SEC inquiry response with the pledge documents, exchange registration, transfer records, and Henglong Group board resolution.

Zhao Chen told Henglong Group’s board that he had used funds from pledging his shares to increase Era Vanguard’s holdings in Tesla and Nvidia, revealing that he controlled the prominent fund. The board unanimously approved his HK$200 million annual compensation plan, and its publication drew intense market attention while Henglong’s share price remained nearly flat.

• Shen Jue asked Zhao Chen to explain how he had used the funds raised by pledging his Henglong shares and whether the pledge threatened the company’s control.
• Zhao Chen disclosed that he had increased Era Vanguard’s holdings in Tesla and Nvidia and that he controlled the fund, which was also a major Tesla and Nvidia shareholder and a SpaceX investor.
• Henglong’s directors connected Era Vanguard’s investments to Zhao Chen’s earlier involvement with Green Energy Technology and his plan to turn Henglong into an investment holding platform.
• The board approved Zhao Chen’s commitment to pay Henglong HK$200 million annually until his pledged shares were released, with the funds going to capital reserves under independent-director supervision.
• Liu Mingyu submitted the pledge announcement and compensation letter to HKEXnews, and financial media and investors quickly focused on the unprecedented compensation commitment.
• Henglong’s share price opened slightly higher before settling near flat as trading volume grew and long-term capital absorbed selling.

Era Vanguard disclosed that its ultimate controller was Zhao Chen, a twenty-three-year-old Chinese investor who also chaired Henglong Group. The revelation stunned Wall Street and China’s financial world, while estimates placed Zhao Chen’s net worth at $12 billion to $15 billion and suggested it could be understated.

• Era Vanguard submitted its SEC response, naming Zhao Chen as Times Pioneer Capital’s ultimate controller and including documents tracing its funds.
• Bloomberg and Reuters revealed Zhao Chen’s identity, shocking traders and the investors who had fought Era Vanguard in Tesla and Nvidia.
• US media reported Zhao Chen’s rapid expansion across Henglong Group and Era Vanguard, while commentators emphasized his age and the scale of his holdings.
• Chinese financial outlets publicized Zhao Chen’s investment history, and Zhengfa University alumni and staff reacted to his sudden fame.
• The Shan City Government asked Zhao Chen’s secretariat to arrange a discussion after his return to China.
• Forbes Chinese Website estimated Zhao Chen’s wealth at $12 billion to $15 billion, potentially placing him among China’s top twenty richest people.

The SEC asked Era Vanguard to document the source of its initial capital, including any cryptocurrency transactions and compliance records. Zhao Chen approved submitting a complete paper trail showing how his Bitcoin investments grew from 500 million Hong Kong dollars to nearly 8 billion US dollars, leaving his wealth’s origins set to become public.

• Lin Shicheng told Zhao Chen that the SEC’s second inquiry requested details about Era Vanguard’s initial capital and explicitly asked about cryptocurrency trading.
• Lin Shicheng presented more than two hundred pages of records tracing Zhao Chen’s funds from the pledge of Henglong Holdings shares through Bitcoin purchases, trading, liquidation, and offshore deposits.
• Zhao Chen reviewed the records documenting the purchase of 355,000 Bitcoin, trading that increased the holdings above 500,000, and a net profit of 7.94 billion US dollars after liquidation.
• Zhao Chen instructed Lin Shicheng to submit every Bitcoin transaction record and to check potential tax, anti-money-laundering, and cross-border transfer issues.
• Lin Shicheng explained that the supporting compliance records and legal opinion were ready, and Zhao Chen approved making the full source of his wealth public.

Lin Shicheng organized the documents tracing Era Vanguard’s initial capital to Zhao Chen’s Bitcoin profits into a four-phase appendix for the SEC. After verifying the supporting records formed a complete chain, he reported the framework to Zhao Chen at dawn.

• Lin Shicheng returned to the Era Vanguard office and began arranging more than two hundred pages of financial records for the SEC.
• Lin Shicheng documented how Zhao Chen raised seed capital by pledging his Henglong Holdings shares and used the funds to buy Bitcoin through Coinbase and Bitfinex.
• Lin Shicheng matched Zhao Chen’s Bitcoin swing trades and later purchases with exchange statements, establishing holdings of approximately 550,000 coins.
• Lin Shicheng documented Zhao Chen’s December 2017 liquidation of about 500,000 Bitcoins, which produced approximately $7.94 billion in net profits.
• Lin Shicheng traced those profits into Era Vanguard’s US stock investments and verified that the dates, amounts, and accounts matched across the records.
• Lin Shicheng told Zhao Chen that the four-phase framework was complete, and Zhao Chen thanked him.

Lin Shicheng submitted Era Vanguard’s more than two hundred pages of supporting documents to the SEC, tracing its initial funds from a Henglong Holdings pledge through Bitcoin trading and later investments. Bloomberg and Reuters quickly reported the disclosed $7.94 billion profit and verified that the Bitcoin records matched historical prices, while Lin began preparing an amended Nvidia Schedule 13D filing.

• Lin Shicheng cross-checked and bound four volumes of documents tracing Era Vanguard’s funding, Bitcoin trades, liquidation, and subsequent fund transfers.
• Lin Shicheng submitted the SEC response and its attachments through EDGAR, then sent the confirmation receipt to Zhao Chen, Chen Xi, and Zhang Qingxue.
• Bloomberg reported that Era Vanguard had disclosed its Bitcoin trading records and earned $7.94 billion in net profit.
• Reuters reported Era Vanguard’s average Bitcoin purchase and sale prices, peak holdings, and use of the proceeds to invest in Tesla, Nvidia, and SpaceX.
• Reuters analysts found that Era Vanguard’s disclosed execution prices matched historical Bitcoin prices and noted that it sold near the period’s peak.
• Lin Shicheng began organizing materials for an amended Nvidia Schedule 13D filing due the next day.

Reuters and Bloomberg verified Era Vanguard’s source-of-funds documents, confirming Zhao Chen’s Bitcoin trades and nearly $7.94 billion in profits against historical market data. The disclosures left Wall Street impressed by how thoroughly Zhao had documented the fund’s finances from the beginning.

• Marcus Chen reviewed Era Vanguard’s attachments and verified its Bitcoin trades against historical prices and blockchain records.
• Marcus calculated that Era Vanguard had earned approximately $7.94 billion from its Bitcoin position and wrote a report confirming the records.
• Bloomberg and Reuters published reports describing Zhao Chen’s trading returns and the unusually complete documentation submitted to the SEC.
• A gray-haired old man read the documents at the Explorers Club and concluded that Zhao had kept evidence in anticipation of future scrutiny.
• Bloomberg and a former SEC enforcement official praised Era Vanguard’s records as an exceptionally complete account of the fund’s origins.

Xu Yong and Sun Zhengping reviewed Era Vanguard’s SEC response and verified the source and records behind Zhao Chen’s Bitcoin profits. The documents changed their view of Zhao Chen from a lucky, impulsive investor to a disciplined businessman who had prepared for regulatory scrutiny from the beginning.

• Xu Yong read Era Vanguard’s four-volume SEC response, including the records of Zhao Chen’s Bitcoin purchases, trades, and final liquidation for $7.94 billion.
• Xu Yong called Sun Zhengping and said the crucial detail was that Zhao Chen had held his Bitcoin for nearly thirteen months.
• Sun Zhengping reviewed the marked documents and judged the financing, transfers, offshore company records, taxes, and trading fees to be clean and fully documented.
• Sun Zhengping concluded that Zhao Chen’s gains reflected discipline and management ability rather than luck, and that Zhao Chen had followed strict compliance practices from the outset.
• Sun Zhengping said he would review the report again, call Zhao Chen, and reassess him as an investor.

After Zhao Chen’s complete Bitcoin trading records were disclosed in SEC attachments, Chinese financial and blockchain media verified his trades and reported how he built and liquidated his position. The coverage left Wang Shuo convinced that Zhao had organized the evidence years in advance, anticipating future scrutiny.

• Wang Shuo verified Zhao Chen’s disclosed Bitcoin trades against exchange records and found that Zhao had preserved detailed paper and electronic records of his transactions and fees.
• Lin Wei compared Zhao’s trading timeline with Bitcoin’s price history and confirmed his entry, trading, and liquidation windows.
• A Beijing financial editor noted that Zhao’s records anticipated tightening compliance requirements for cross-border digital currency transfers.
• ChainNews, First Finance, and other domestic outlets published reports analyzing Zhao’s Bitcoin trades, records, and compliance preparations.
• Wang Shuo noticed Zhao’s final transfer remark, “Seed Lands,” and concluded that the chronologically indexed attachments had been prepared years before any investigation.

SEC examiners reviewed Era Vanguard’s extensive response to their inquiry and found its cryptocurrency records, banking documents, and tax planning materials unusually complete and verifiable. Peterson recommended ending the examination and formally closing the case.

• Peterson convened the examination team to review Era Vanguard’s indexed attachments and noted that the fund had supplied answers to questions the SEC had not even asked.
• Lisa Chen observed that Era Vanguard had voluntarily provided more than two hundred pages of organized records.
• Ramirez verified that the listed cryptocurrency transaction hashes, timestamps, amounts, and addresses matched on-chain transfers.
• Peterson pointed out that Zhao Chen had preserved his bank and exchange records from the time of the trades, while Ramirez found a tax provision memorandum signed before the Bitcoin liquidation.
• Peterson noted that Zhao Chen had liquidated Bitcoin at a carefully chosen time and recommended ending the examination and formally closing the case.

The SEC formally closed its review of Era Vanguard’s funding, finding its sources lawful and compliant and rejecting allegations from Muddy Waters and Citron Capital. Lin Shicheng issued a restrained public statement, while Zhao Chen and his colleagues received the decision as a long-awaited vindication.

• Lin Shicheng received the SEC’s closure letter, which confirmed Era Vanguard’s funding was lawful and compliant and said no investigation would be initiated.
• Lin Shicheng informed Zhao Chen, then planned updates to compliance records, a restrained media statement, and permanent archiving of the investigation documents.
• Lin Shicheng issued the statement, and Bloomberg, Reuters, and CNBC reported the SEC’s findings and rejection of the allegations.
• Zhang Qingxue forwarded Lin Shicheng’s message to Chen Xi and Su Wantang, who suggested sharing copies of the closure letter with independent directors.
• Zhao Chen sent Elon Musk the scanned letter, and Musk replied that he knew Era Vanguard’s money was clean.