[jessedhillon]

I forget the exact number, but I think if a private company has >= 500 individual shareholders, that triggers an SEC requirement for public disclosures. So this kind of trading activity could force a company to, e.g. reveal that it's not yet profitable, or it's been astroturfing growth on it's current hot app.

[kevinastone]

It's not actually trading stock or adding shareholders. It's collateralizing the shares, much like you mortgage your home. They simply front you money with a lien against your shares.