Crypto Bankruptcies Threaten Customers’ Life Savings – Fox Business | Vette Leader

Some crypto investors are on the brink of financial ruin after entrusting their nest egg to two unregulated crypto marketplaces that have gone bankrupt.

Many are investing their life savings in virtual currencies, only to see their funds frozen while the courts decide the fate of their investments.

Their plight has prompted members of Congress to call for investor education and more regulation.

Senators Debbie Stabenow, D-Mich., and John Boozman, R-Ark., introduced legislation Wednesday to give the Commodity Futures Trading Commission new tools and powers to regulate digital commodities.

CRYPTOCURRENCY GUIDE CELSIUS NETWORK ACCEPTED BANKRUPTCY AS PRICES PULSE

The logo of crypto company Celsius on a computer screen on June 14, 2022. (Silas Stein/Picture Alliance via Getty Images/Getty Images)

New legislation comes too late for Celsius Network and Voyager Digital customers.

An investor named Donald said he felt “completely ashamed and embarrassed” for investing $31,000 in Voyager Digital Holdings.

“Losing that money with no end in sight was excruciating for my family and I,” Donald said. “I wake up most nights and just walk up and down the stairs, thinking about my own mistakes and wondering if this is ever going to end.”

John Dalisay, who is paralyzed from the neck down, sent a letter to a judge saying he was depressed and unable to work after his life savings were frozen.

“I have already suffered a tragic loss of my ability to ever walk again and have done my best to be strong and fight to start my life over,” Dalisay wrote. “I feel humiliated and defeated.”

Dalisay invested money from his $8 an hour job at Celsius Network.

“I’m not looking for luxury, Your Honor,” he wrote. “I only wanted to be able to afford the bare essentials. Please help me to be whole again as this situation Celsius created is ravaging my sanity.”

Voyager customers asked a judge to unblock their accounts. A hearing on that motion is scheduled for today.

Crypto lender Celsius and crypto broker Voyager Digital filed for Chapter 11 bankruptcy in July, freezing their clients’ assets. Celsius has 1.7 million customers and $6 billion in assets. Voyager has 3.5 million users and over $5.9 billion in cryptocurrency assets.

CRYPTO CRASHES SHOW THE NEED FOR STRONGER RULES: BANK OF ENGLAND

Corporate bankruptcies are generally fights between rival groups of Wall Street investors backed by attorneys who often charge $1,000 or more an hour.

The Celsius and Voyager cases are exceptions. Every day, investors flood the courts with desperate pleas for their money back.

“There is rarely enough money to cover the investor,” said Melanie Senter Lubin, president of the North American Securities Administrators Association, who testified at a Senate Banking Committee hearing on crypto fraud last week.

“If these investors are considered unsecured creditors, they’re put in the pool with everyone else, and they’re usually at the end of the line.”

Safer than a bank?

Celsius and Voyager promoted the security of their investments.

“Celsius said overwhelmingly…we put our money in it [their] Custody was much safer than keeping it in a regular bank account,” wrote Paul Niehe, who switched his retirement savings to crypto.

Ryan Hourigan invested a portion of his paycheck into Voyager each month, in addition to the savings in his account.

“I used Voyager to replace my savings account because it was advertised as FDIC-insured,” Hourigan said. “I now regret it and fear I’ve lost pretty much everything for trusting this company.”

“They made amazing claims, like offering up to 20% interest while claiming they were FDIC insured and citing ‘safer than banks,'” said Sen. Elizabeth Warren, D-Mass., at the hearing in the last week. “No risk. Twenty percent return. That was a lie from the start.”

They made amazing claims like offering up to 20% interest while claiming they were FDIC insured and citing “safer than banks.”

– Senator Elizabeth Warren, D-Mass

Federal Reserve Building in Washington, DC

This file photo dated May 4, 2021 shows the Federal Reserve Building in Washington. (AP Photo/Patrick Semansky, File/Associated Press)

The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve have directed Voyager to stop making false and misleading statements about its FDIC deposit insurance status and to take immediate corrective action.

Celsius allowed customers to get real dollar loans by using their crypto holdings as collateral. Customers could also earn interest by lending their deposited coins, according to the company’s whitepaper.

Voyager offered a secure way to trade over 100 different crypto assets using a mobile app and promoted rewards for more than 40 cryptocurrencies, the company’s white paper states.

At least one person has turned to crowdfunding for help. Eduardo Dorrance wants to save his family’s animal rescue with a GoFundMe campaign. His family is a month away from losing the business.

crypto winter

Binance exchange

The Binance Exchange website on a laptop, set up in Dobbs Ferry, NY, February 20, 2021. (Tiffany Hagler-Geard/Bloomberg via Getty Images/Getty Images)

Crypto investors who have used other platforms are not immune to losses.

Cryptocurrencies have lost an estimated $2 trillion in value since peaking in a market slump nicknamed “crypto winter” last year.

Bitcoin, the largest cryptocurrency, peaked at $68,789 per coin on November 10, 2021, before falling to a low of $17,709 on June 18, according to CoinMarketCap data.

CLICK HERE TO GET THE FOX NEWS APP

“It’s very important for people to understand how a particular investment works, how they could lose money investing, what they’re paying for that investment, and what their options are,” said Gerri Walsh, senior vice president of Investor Education at of the Financial Industry Regulatory Authority, said.

“When this happens outside of the regulatory arena, investor recourse can be difficult.”

Walsh testified at the Senate hearing.

Leave a Comment