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Archegos collapse: the hidden bets that cost banks $10 billion

In late March 2021, a private fund most people had never heard of fell apart in about a week. Its banks lost more than $10 billion, and one of them lost $5.5 billion on its own.

Story · 7-minute read · Updated 2026-10-21

Who they were

Archegos Capital Management was a family office. That means it managed the money of one family, not outside investors, so it had to tell the public very little.

It was run by Bill Hwang, a former hedge fund manager who set it up in 2013. By early 2021, prosecutors later said, it managed about $36 billion.

On paper, that was a lot of money. The bets it held were far bigger.

What happened

Archegos didn't buy most of its stocks directly. It used deals called total return swaps with big banks.

In plain words, a swap works like this. The bank buys the shares. Archegos gets paid if the price goes up and pays the bank if it goes down. Archegos puts up only part of the cost, like a deposit.

Two things made this risky.

First, borrowing. With only a slice of the money down, Archegos could control far more stock than it owned. Prosecutors said its total stock exposure reached about $160 billion. That's huge leverage.

Second, secrecy. Because the banks held the shares, Archegos didn't have to report its stakes the way a normal big investor would. And each bank saw only its own deals. None of them saw the whole picture.

The fund also packed its money into a few stocks, including ViacomCBS and several Chinese tech companies. Prosecutors said Archegos at one point controlled more than half of ViacomCBS's shares through these deals.

The moment everyone remembers

On 22 March 2021, ViacomCBS announced it would sell about $3 billion of new shares. The stock started to fall.

For a normal investor, a falling stock is painful. For a fund borrowing several times its money, it's an emergency.

The banks asked Archegos for more cash to cover the drop (a margin call). It couldn't pay.

So the banks started selling the shares they held, fast. Some got out early. Others waited. In just a few days, huge blocks of stock were dumped on the market, pushing prices down further and faster.

Credit Suisse lost about $5.5 billion. Japan's Nomura lost billions more. Across the banks, the losses passed $10 billion. Archegos's own $36 billion was gone.

What happened next

In April 2022, Bill Hwang and other Archegos staff were charged in New York.

In July 2024, a jury convicted Hwang on 10 of 11 counts, including securities fraud, wire fraud, market manipulation and racketeering conspiracy. The case wasn't about losing money. It was about lying to banks about the fund's positions and using the trading to push prices up.

On 20 November 2024, he was sentenced to 18 years in prison. Reports at the time said he planned to appeal.

What it teaches

1. Leverage hides how close the edge is

On a good day, borrowed money feels like skill. On a bad day, it decides when you get out, not you.

Archegos didn't choose to sell. Its lenders chose for it. That's what a margin call is. Read leverage and margin explained and work out a real example with the margin calculator.

2. A few big bets can become one big loss

Packing most of your money into a handful of stocks means one bad week can hit everything. Many of Archegos's holdings fell together.

The beginner version of the fix: risk a small, fixed slice on each trade, around 1%, and work out the size from your stop. See how much to risk per trade and use the position size calculator.

3. When you're big, there's no quiet exit

Even if Archegos had wanted to sell, the positions were too large to sell calmly. Every sale pushed the price down. That's liquidity working against you.

What it doesn't mean

• It doesn't mean swaps or borrowing are illegal. Total return swaps are common. The crimes were about lying to lenders and manipulating prices, as the jury found.
• It doesn't mean regular investors face a $10 billion risk. The scale was extreme. The pattern, borrowing against a few stocks, is what's worth learning from.
• It doesn't mean "the banks were the victims, so nobody else was hurt." Investors in the stocks also saw sharp drops during the fire sale.
• It's a story about risk, not about one person's character. The court's ruling and sentence are the documented record. Appeals may still change the details.

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