If Melvin fails, all of their remaining assets get liquidated, and then the investment banks backing Melvin are on the hook to cover remaining losses. As long as the price of GME continues rising, the losses continue to grow for the hedge fund and their investment bank backers. And as the price continues rising, investors are able to borrow against their gains in order put in more buys, driving the price up further, resulting in higher losses for the hedge funds and investment banks.