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The author likely used the term "counterfeit" since they're essentially copying the shares and redistributing them as if they represent the same value as the or

• bouncycastle 6y ago
  The author likely used the term "counterfeit" to stir up a controversy. It's more like if I started lending you some rocks, and told you that each rock is always 1 Tesla share. You can always come to me and cash in that rock for whatever a Tesla share is. I'm not lending you counterfeit Tesla shares, but rocks. There's no counterfeiting going on.
  • jb775 6y ago
    The salient aspect here is what they're using them for: to drive the price down or up. If I place a bet on the direction of the price pegged to a given type of rock, then borrow millions of those rocks from you, then trade those rocks back and forth with my buddies to create the illusion of demand momentum (linked to an artificial price pattern going down or up)...I can swing the price pegged to that rock. So the rock could still be cashed in for whatever price it's pegged to, but that doesn't mean I didn't mess with that price. (would take massive amounts of capital obviously) I'm also not sure if there's any way to tell if it's only being lent out once. Since futures contracts are even more abstract than stock ownership (i.e. have the option to possibly purchase blocks of shares in the future or just scrap the contract altogether), there's probably ways to create value by taking on risk in the form of overextending the appearance that you have access to a security at a certain price. This video explains everything going on: https://www.youtube.com/watch?v=gMShFx5rThI https://www.youtube.com/watch?v=gMShFx5rThI