Cryptocurrency investors are known for their devotion, but their confidence is shattering as the company’s latest collapse shakes the industry.
The news that the customers of the bankrupt agent Voyager Digital Ltd. will probably not recover all their money has caused a new kind of fear to those who are already affected by the rapid fall of the sector.
Cryptocurrency traders often dismiss the pronounced losses, arguing that they remain long-term and expect prices to rebound. However, for investors who relied on Voyager with their retirement savings, down payments and emergency cash, the prospect of their investments disappearing forever is a wake-up call for those who believed the big platforms commercials offered a form of security.
Aaron Selenica, 21, says he “fell into cryptocurrency madness” last fall after learning to talk about Bitcoin from his friends and joining the University of Connecticut cryptocurrency club. He saw Voyager ads at school basketball games and eventually invested about $ 15,000 in Bitcoin on the platform.
Now, his stakes are worth about $ 6,900 and he doubts he can even get it back. I knew that investing in cryptography entailed risks, but I never expected the platform to collapse.
“It feels like they stole from me,” he said. “I don’t understand how this could be legal. I won’t invest in another platform. I’m done with cryptography.”
The recent cryptocurrency crash, with Bitcoin dropping about 70 percent from its maximum, is fueling widespread financial problems for companies involved in the space. Lenders such as Celsius Network, Babel Finance and Vauld have suspended withdrawals, while companies such as Coinbase Global Inc. they are cutting jobs. The implosion of the Voyager is the latest debacle is what is now called cryptohivern.
GRATED SYSTEM
“This kind of downside risk can be pretty brutal,” said Mike Bailey, research director at FBB Capital Partners. “Somehow, when investors suffer this kind of loss, just like when a bond goes to zero, you can feel that the system is broken. In this case, investors may believe an impression that the system has failed, provoking the desire to get out of it “.
Voyager has just filed for bankruptcy and many legal questions remain unanswered. But the company made it clear in its plan to get out of bankruptcy that account holders will be “harmed” by the Chapter 11 process, which means they probably won’t get back everything they owe. The platform has about $ 1.3 billion in cryptographic assets.
Cryptocurrency traders who can still get their money off the platforms do so so quickly. According to Glassnode, the total balance of trade has fallen more than 20 percent since the January 20 high. Meanwhile, activity in the Bitcoin chain had fallen 13 percent in early July since the November peak.
For Telvin Hodo in Georgia, not having access to money from his Voyager account could jeopardize his recent home purchase. The 29-year-old professor invested about US $ 11,000 over the past year on the platform in currencies such as Bitcoin, Dogecoin and Polkadot, along with some stable currencies. Now, the value of his holdings has been halved, and he can’t even access any of the money he needs for the down payment and closing costs of his home.
“It’s terrible,” he said. “I can’t buy or sell, and I don’t know how long it will be before I can.”
LAST STORM
For many crypto traders, it is to be expected to see the value of their holdings fall, at least occasionally. Losing that investment completely is almost unfathomable.
Ralpha Twam, a 39-year-old health care recruiter in New Jersey, thought his money was safe from Voyager because it is insured by the FDIC. After testing crypto for the first time in 2017, he opened a Voyager account in November because he knew how to talk about the rewards the company offered, such as an average percentage return of 9%.
He mainly uses his account for short-term trading, but two weeks ago he deposited about US $ 10,000 (still in US dollars on the platform) and now cannot access it, although the funds are not in any kind of cryptographic token. . He said he feels the company used “deceptive marketing tactics.”
Voyager has said those with US dollar deposits will be able to recover that money “after a process of reconciliation and fraud prevention has been completed,” but Twam is not optimistic.
“It’s definitely a lesson learned that you have to do your due diligence,” he said. “It’s very easy to get attracted, but you have to read the fine print.”