Strange India All Strange Things About India and world



Voyager Digital’s collapse is rattling the crypto industry.Crypto investors are known for their devotion, but their confidence is cracking as the latest company collapse rattles the industry.News that customers of bankrupt broker Voyager Digital Ltd. likely won’t get all their money back has struck a new kind of fear into those already whipsawed by the sector’s swift declines.Crypto traders often shrug off steep losses, arguing they’re holding for the long term and expect prices to rebound. Yet for investors who trusted Voyager with their retirement savings, down payments and emergency cash, the prospect that their investments might be gone forever is a wakeup call for those who believed large trading platforms offered a form of security.Aaron Selenica, 21, says he “fell into the crypto craze” last fall after hearing about Bitcoin from his friends and joining the University of Connecticut’s crypto club. He saw ads for Voyager at the school’s basketball games and eventually invested about $15,000 in Bitcoin on the platform. Now, his holdings are worth about $6,900 and he doubts he’ll even be able to get that back. He knew investing in crypto came with risks, but he never expected the platform to collapse.“It feels like I was robbed,” he said. “I just don’t understand how this could be legal. I’m not going to invest on another platform. I’m done with crypto.”The recent crypto plunge, with Bitcoin down about 70% from its peak, is fueling widespread financial troubles for companies involved in the space. Lenders like Celsius Network, Babel Finance and Vauld have suspended withdrawals, while firms such as Coinbase Global Inc. are cutting jobs. The Voyager implosion is the latest debacle is what is now being called a crypto winter.Broken System“This type of downside risk can be pretty brutal,” said Mike Bailey, director of research at FBB Capital Partners. “In some ways, when investors suffer these kinds of losses, similar to when a bond goes to zero, it can feel like the system is broken. In this case, investors may believe an impression that the system has failed, leading to a desire to exit.”Voyager only just filed for bankruptcy and many legal questions remain unanswered. But the company made clear in its plan to exit bankruptcy that account holders will be “impaired” by the Chapter 11 process, which means they probably won’t get back all that they’re owed. The platform has about $1.3 billion in crypto assets. Crypto traders who can still pull their money off platforms are doing so quickly. The total balance on exchanges has fallen more than 20% from a Jan. 20 high, according to Glassnode. Meanwhile, on-chain activity for Bitcoin had dropped 13% in early July from the peak in November. For Telvin Hodo in Georgia, not having access to the money in his Voyager account could jeopardize his recent home purchase. The 29-year-old teacher invested about $11,000 over the past year on the platform in coins like Bitcoin, Dogecoin and Polkadot, along with some stablecoins. Now, the value of his holdings has dropped by about half, and he can’t even access any of the money, which he needs for the down payment and closing costs of his house. “It’s terrible,” he said. “I can’t buy or sell, and I don’t know how long it’s going to be before I can.”Latest StormFor many crypto traders, watching the value of their holdings fall, at least occasionally, is to be expected. Losing that investment altogether is almost unfathomable. Ralpha Twam, a 39-year-old health care recruiter in New Jersey, thought his money was safe on Voyager because it’s FDIC insured. After first trying out crypto in 2017, he opened a Voyager account in November because he heard about rewards the company was offering, like a 9% average percentage yield. He mostly uses his account for short-term trading, but just deposited about $10,000 two weeks ago — still in U.S. dollars on the platform — and now can’t access any of it, despite the funds not being in any kind of crypto token. He said he feels like the company used “deceptive marketing tactics.”Voyager has said that those with US dollar deposits will be able to reclaim that money “after a reconciliation and fraud prevention process” is completed, but Twam isn’t optimistic. “It’s definitely a lesson learned that you have to do your diligence,” he said. “It’s so easy to get lured in, but you have to read the small print.” 



Source link

By AUTHOR

Leave a Reply

Your email address will not be published. Required fields are marked *