South Korea’s KOSPI plunged about 40% over six weeks in June and July after an artificial-intelligence memory-chip rally, erasing roughly $2.5 trillion in market value before rebounding about 20% from its lows. The sell-off, amplified by single-stock leveraged products and heavy retail participation, spilled across the Pacific: U.S. AI hedge fund Situational Awareness, run by former OpenAI researcher Leopold Aschenbrenner and heavily positioned in SK Hynix, posted a roughly 67% July loss and liquidated most public equities to repay loans, prompting an SEC investigation into margin-call timing and leverage communications with major banks. American retail investors also gained direct exposure via Interactive Brokers’ Korean stock access and Roundhill’s DRAM ETF, in which Samsung Electronics and SK Hynix made up nearly half of assets. Local retail investors, who account for 60% to 70% of daily Kospi volume, suffered steep losses, spurring funeral wreaths at the National Assembly, political pressure on President Lee Jae-myung, and regulatory curbs including suspended approvals for new single-stock leveraged products and a higher cash-margin threshold of about $21,000.