Retail was seen as a risk to the markets during the GameStop saga, but the explosion of Archegos prompted Reddit users to point fingers at Wall Street.

• Hedge fund Archegos triggered $ 20 billion in sales on Friday after failing to respond to margin calls.
• The leveraged explosion has made traders on Reddit wonder what the real systemic risk is for the markets.
• Wall Street betting and the retail boom would have been dangers to the markets in the GameStop saga.
• Sign up here for our daily newsletter, 10 things before the opening bell

Retail traders on Reddit’s Wall Street Bets forum took a lot of heat during the recent GameStop saga for coordinating on the forum to pump the price of their favorite stocks.

After the historic explosion of hedge fund Archegos at the end of last week following betting on leveraged stocks, many on the platform are pointing fingers at Wall Street.

In January, Wall Street Bets traders began targeting stocks with high short interest rates in hopes of generating short tightening and quick profits. The struggling video game distributor GameStop has become the group’s favorite target.

After the GameStop share price soared, US regulators questioned whether the Reddit forum and its retail trader members were part of the market manipulation. The Securities and Exchange Commission and the Commodity Futures Trading Commission have started examining traders’ actions on forums like Reddit to see if any illicit activity is taking place.

European Union regulators have said the Redditors’ actions “may constitute market manipulation” and that they will also monitor the situation.

In an interview with CNBC on Feb. 1, Democratic Representative Stephen Lynch of Massachusetts even argued that trading powered by Reddit could lead to “systemic risk” in the markets.

Now that Archegos’ leveraged bets have caused a handful of stocks to collapse and reverberate in the markets, traders at Reddit are questioning how they have been treated by regulators and media versus hedge funds.

A post that garnered more than 14,000 upvotes in less than five hours on Monday made the case for Redditors: “Can we just appreciate for a moment that a large multi-family private office took advantage of ts, did default on a margin call, and it causes a market-wide sale to the tune of tens of billions of dollars, and yet I’m the irresponsible retail idiot whose risky trading is dangerous. “

Archegos Capital is headed by Bill Hwang, a former investor in the famous Tiger Management fund. Archegos’ inability to respond to margin calls forced banks to sell $ 20 billion in shares held by the company en masse.

The sales caused a selloff at many big names, from Baidu to Discovery, on Friday.

Many editors and market commentators have questioned why banks would allow Archegos to leverage his bets to such an extent given Hwang’s story: he pleaded guilty to telegram fraud in 2012 after his company, Tiger Asia, traded on non-public information, reaping $ 16 million in illicit profits in 2008 and 2009, Bloomberg reported.

The Bloomberg report said Goldman Sachs had Hwang on its blacklist after being indicted, but “at some point in the past two and a half years the firm changed its mind about Hwang.”

This change of mind may have allowed Hwang to profit from his equity bets. While it is difficult to say that the Archegos crisis has created systemic risk for the markets, it could very well move forward.

“The Archegos drama involves a classic mix of massive leverage, concentrated positions, derivative overlays, forced deleveraging and struggling sales,” said Mohamed El-Erian, president of Queen’s College and advisor. Chief Economic Officer of Allianz, in a LinkedIn article. “The pain has so far only been felt in a handful of stocks … What happens next depends on the remaining sales and associated contagion channels.”