[DigitalToday reporter Jinju Hong (홍진주)] A $5.4 million leveraged short position targeting Nvidia was spotted on the decentralised derivatives exchange Hyperliquid. With a personal life controversy involving Nvidia Chief Executive Jensen Huang and suspicions that China collected semiconductor technology information surfacing, the emergence of a large downside bet is adding to market caution.

On Nov. 9 (local time), the blockchain outlet U.Today reported that an unidentified large investor built a 10x leveraged short position in 30,000 Nvidia-linked contracts on Hyperliquid.

On-chain analytics firm Lookonchain said the position had a notional size of about $5.44 million. The investor entered at about $181.33 per contract and is estimated to have posted about $544,000 in initial margin by applying 10x leverage.

The trade is drawing attention because it came shortly after controversy surrounding Jensen Huang emerged. According to the report, Huang admitted to employees on Nov. 8 that he had been unfaithful to his spouse. The New York Times (NYT) had earlier published a report about Huang's relationship with Chinese-American businesswoman Alice Huang.

NYT also reported that U.S. intelligence authorities are examining the possibility that Alice Huang was recruited by China's Ministry of State Security and may have been involved in monitoring Jensen Huang. A confidential intelligence memo related to the matter was also said to include content that China sought to collect information related to U.S. artificial intelligence (AI) technology.

In the process, Nvidia's China business also became central to the controversy. That is because suspicions were raised that the operation sought to influence Nvidia's position on restrictions on exports of cutting-edge AI semiconductors to China.

Singapore technology company Megaspeed was also mentioned as being under investigation by U.S. authorities. Megaspeed was cited as a buyer of Nvidia's high-performance semiconductors, and is suspected of possibly allowing AI chips subject to U.S. export restrictions to flow into China.

However, suspicions of espionage or rerouted semiconductor exports to China have not been publicly proven. There is a need to distinguish between allegations raised so far and confirmed facts.

Markets are also focusing on Nvidia's share weakness apart from the controversy. Nvidia shares have fallen about 8.8 percent over the past five sessions, and rebounded 2.8 percent on Nov. 7. Expectations for earnings and AI semiconductor demand remain, while executive-related controversy and U.S.-China technology tensions have emerged as new variables.

The large short position on Hyperliquid shows that uncertainty surrounding Nvidia is leading to downside bets not only in traditional stock markets but also in crypto-based derivatives markets. Still, it is difficult to judge the overall market direction based on a single investor's position alone.

Key questions going forward are whether the facts surrounding allegations involving Jensen Huang will be further confirmed, and whether U.S. export controls on AI semiconductors to China will be tightened further. Depending on how the two issues affect Nvidia's operating environment and investor sentiment, volatility in the stock and derivatives markets could increase.