Latest Crypto Crash Leaves Wishers Baffled And Hurt


LONDON/MUMBAI/ANKARA (Reuters) – For Jeremy Fung, North American cryptocurrency lender Celsius was the perfect place to store your crypto holdings — and earn some of the money you spend at double-digit interest rates throughout the year.

“I was probably making $100 a week” at places like Centennial, said Fong, 29, a civil aviation worker who lives in Derby, central England. “That covered my purchases.”

Now, though, Fong’s cryptocurrency — about a quarter of his wallet — is stuck in degrees Celsius.

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A New Jersey-based crypto lender froze the withdrawals of 1.7 million of its clients last week, citing “difficult” market conditions, liquidating hundreds of billions of dollars in value in cryptocurrencies globally. See more information

Fong’s long-term cryptocurrency holdings are down around 30%. “Definitely in a very uncomfortable situation,” he told Reuters. “My first instinct is to take it all off,” he said.

The centenary boom came on the heels of the collapse of two other major currencies last month, shaking an already stressed crypto sector, with soaring inflation and rising interest rates causing stocks and other risky assets to flee. See more information

Bitcoin price fell below $20,000 on June 18 for the first time since December 2020. It has fallen nearly 60% this year. The overall cryptocurrency market has fallen to around $900 billion, down from a record $3 trillion in November. See more information

The crash left retail investors around the world bruised and confused. Many are angry at Celsius. Others vowed never to invest in cryptocurrencies again. Some, like Fong, want stronger oversight of the freedom of movement sector.

Susanna Streeter, an analyst at Hargreaves Lansdown, likened the turmoil to the collapse of internet stocks in the early 2000s — with technology and low-cost capital making it easier for retail investors to access cryptocurrency.

“We have this collision between smartphone technology, trading apps, cheap money and highly speculative assets,” she said. “That’s why I saw the ups and downs of the meteor.”

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“Move in the dark at 2 AM”

Cryptocurrency lenders like Celsius offer high interest rates to investors – especially individuals – who deposit their coins on these sites. These unregulated lenders mostly invest deposits in the wholesale cryptocurrency market. See more information

Celsius’ problems appear to be related to its wholesale cryptocurrency investments. With these investments faltering, the company has been unable to meet client refunds from investors amid the broader slump in the cryptocurrency market. See more information

Freezing recovery at one degree Celsius was like a small bank closing its doors. But a conventional bank, which is overseen by regulators, will have some form of protection for depositors.

Among those affected by the centenary freeze is Alisha G, 38, of Pennsylvania.

Ji has invested “every last bit” of his salary in cryptocurrency since 2018, which has accumulated in the five-figure sum. She has $30,000 in percentage deposits — part of her total crypto holdings — from which she earns between $40 and $100 in interest per week, which she hopes will help her pay off her mortgage.

A little over a week ago, Ji received an email from Celsius stating that he could not make withdrawals. “I was walking around in the dark at two in the morning, walking back and forth,” she said.

“I believe in the company,” Gee said. “It’s not a good idea to lose $30,000, especially since I could have paid off my mortgage.”

Gee said he will continue to use the degree, saying he is “loyal” to the company and has never had problems before.

Celsius CEO Alex Mashinsky tweeted on June 15 that the company is “working around the clock” but provided some details on how and when withdrawals will resume. Celsius said on Monday it intends to “stabilize our liquidity and operations.”

baffles

For some, the enthusiasm for cryptocurrency is not perverted.

“I have seen several bear market cycles so far, so I am avoiding any backlash,” said Smenesh Saludkar, a 23-year-old from Mumbai whose cryptocurrency holdings are in decline.

For others, warnings from regulators around the world about the dangers of diving into cryptocurrency have become a reality.

Khelil Ibrahim Gucer, a 21-year-old in the Turkish capital of Ankara, said his father’s $5,000 investment in crypto has fallen to $600 since he introduced him to cryptocurrency.

“Knowledge can take you so far in the cryptocurrency space,” said Josser. “Luck is what matters.”

Another investor, a 32-year-old IT worker in Mumbai, said he poured three-quarters of his savings — several hundred dollars — into cryptocurrencies. Its value decreased by about 70%-80%.

“This will be the last investment in a cryptocurrency,” he said, who asked not to be identified.

Regulators in countries around the world are working on how to create safeguards for cryptocurrencies that can protect investors and reduce risks to broader financial stability.

Last week, a US Treasury official said that the turmoil in the cryptocurrency market caused by the percentage score highlights an “urgent need” to regulate cryptocurrencies. See more information

Fong, a British investor who lost access to Celsius cryptocurrency, wants things to change.

“Basically, a little bit of regulation would be nice, but I think it’s a balance,” he said. “If you don’t want a lot of organization, this is what you get,” he said.

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Additional reporting by Tom Wilson and Elizabeth Hawcroft in London, Nupur Anand in Mumbai and S. Toksabai in Ankara. Editing by Jane Merriman

Our Standards: Thomson Reuters Trust Principles.

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