Muddy waters of short sellers: the essence of short selling by retail investors is that hedge funds encircle and suppress each other.

Just last week, Andrew Lefter (Andrew Left), founder of Citron, a well-known short institution, announced his withdrawal from short selling and focused on long research. A few days later, another well-known figure in the industry, Carson Block, founder of Muddy Waters Research, came forward to defend short selling.

Over the past two days, Block has accused the Federal Reserve Board of apparently taking a "defiant" approach to monitoring markets. Block believes that "financial markets have collapsed" and says the solution may be to raise interest rates and taxes.

Block agrees that there is a growing sense that financial markets are overvalued and that when Bubble finally collapses, mainly small investors will be hurt.

He accused the Fed of injecting too much liquidity, allowing too much credit expansion and too much leverage. He said:

"We need a meaningful combination of monetary and fiscal policy, or we will be trapped in a larger powder keg that will explode again."

Carson Block, known for shorting Chinese stocks, sees an intriguing side to the rally in stocks such as GameStop, and he has an intriguing view of the real mastermind of the battle: in his view, the parabola is less like retail investors on Reddit and more like hedge funds shorting against other hedge funds. Block said in a television interview:

"I've always wondered, is there a hedge fund alliance? What kind of union is it? Did they cross the line? These questions may be interesting. "

At present, this is still an unconfirmed guess. But if Block is right, last week's so-called historic retail uprising was nothing more than cannibalism among hedge funds.

The list of casualties in this fight is lengthening the list of seriously injured companies such as, Melvin Capital Management and Maplelane Capital. The funds of, David Einhorn's Greenlight Capital, Renaissance Technologies and other companies have also been affected. It is not clear who is the winner.

Block said his Muddy Waters company had been hurt once a few weeks before the GameStop incident, which he thought was a short run by hedge funds over who to learn stocks from. Because of this incident and the like, he had to hire a full-time trader to monitor the stock options market and adjust his position to manage risk more proactively. He said:

"this is a trading game, a technical game driven by traffic. We will try our best to survive. "

Unlike many short sellers, Block is determined to disclose the names of companies he considers suspicious and shorting himself. He usually writes reports to support his short views and post them online. The short seller said that his company aims to expose fraud and that the company's work is still important because the number of fraudulent activities has not decreased, but has actually increased significantly.

For more than a decade, Muddy Waters has helped expose a series of frauds, the most well-known of which is the existence of large-scale accounting fraud in Luckin Coffee.

He said he began to cut positions about two weeks ago when he noticed that stocks from whom he had learned might be short, and that his company had been shorting and learning from them. After seeing the surge of GameStop, Block decided to retreat on a large scale to avoid the air-to-air war.

In his view, such revelations are socially useful and should distinguish him from short sellers who have been attacked on Reddit, and he disagrees with the idea that he is a member of the Wall Street establishment.

He asked:

If so, why did Goldman Sachs and Credit Suisse reject his business? We are indeed institutions, except for the fact that Wall Street is running on us.