The latest cryptocurrency crash leaves bettors bruised and bewildered.

“I was probably making $ 100 a week” at sites like Celsius, said Fong, a 29-year-old civil aerospace worker living in the central England town of Derby. “He covered my grocery expenses.”

Now, however, Fong’s cryptocurrency – about a quarter of its wallet – is locked in Celsius.

The New Jersey-based cryptocurrency lender froze withdrawals for its 1.7 million customers last week, citing “extreme” market conditions, triggering a sell-off that wiped hundreds of billions of dollars off paper cryptocurrencies across the board. global.

Fong’s long-term cryptocurrency holdings are now down about 30%. “Definitely in a very uncomfortable position,” she told Reuters. “My first instinct is to take everything out” from Celsius, she said.

The Celsius blast follows the collapse of two other major tokens last month that rocked an already strained crypto sector as runaway inflation and rising interest rates push to flee stocks and other riskier assets.

On June 18, for the first time since December 2020, bitcoin fell below $ 20,000. This year it has dropped by about 60%. The global cryptocurrency market tumbled about $ 900 billion, down from an all-time high of $ 3 trillion set in November.

The fall has left individual investors around the world shocked and baffled. Many are angry with Celsius. Others vow to never invest in cryptocurrencies again. Some, like Fong, want tighter control of this freewheeling industry.

Susannah Streeter, an analyst at Hargreaves Lansdown, likened the turmoil to the dotcom stock market crash of the early 2000s, with low-cost technology and capital offering retail investors easy access to cryptocurrencies.

“We have this collision between smartphone technology, trading apps, cheap money and a highly speculative asset,” he said. “That’s why you saw a lightning rise and fall.”

Chart: Cryptocurrencies Are Collapsing –

“PACING IN THE DARK 2 AM”.

Cryptocurrency lenders, such as Celsius, offer high interest rates to investors, mostly individuals, who deposit their coins on these sites. These mostly unregulated creditors then invest the deposits in the wholesale cryptocurrency market.

Celsius’ problems appear to be related to his wholesale cryptocurrency investments. As these investments have gone badly, the company has been unable to meet customer redemptions from investors due to the wider crash in the cryptocurrency market.

Freezing redemptions in Celsius is similar to closing a small bank. But a traditional bank, controlled by regulators, would have some form of protection for depositors.

One of the people affected by the Celsius freeze was Alisha Gee, 38, of Pennsylvania.

Gee has been investing “every last drop” of her salaries in cryptocurrencies since 2018, which have piled up to a five-figure sum. She has $ 30,000 in deposits with Celsius – her part of her entire cryptocurrency holdings – earning her interest of $ 40,100 a week, which she hoped would help pay off her mortgage.

A little over a week ago, Gee received an email from Celsius telling her she couldn’t make withdrawals. “I was walking in the dark at 2am, going back and forth,” she says.

“I believed in the business,” Gee said. “It doesn’t make me feel good to lose $ 30,000, especially since I could have put it in my mortgage.”

Ms. Gee said she would continue to use Celsius, saying it was “loyal” to the company and hadn’t encountered any problems before.

On June 15, Celsius CEO Alex Mashinsky tweeted that the company was “working tirelessly,” but provided few details on how or when withdrawals would resume. Celsius said on Monday that it aimed “to stabilize our liquidity and our operations”.

SEALS

For some, the enthusiasm for cryptocurrencies is intact.

“I’ve seen multiple bear market cycles so far, so I avoid any knee-jerk reaction,” said Sumnesh Salodkar, 23, of Mumbai, whose cryptocurrency holdings are declining but still in positive territory.

For others, warnings from regulators around the world about the risks of cryptocurrency speculation have come true.

Halil Ibrahim Gocer, a 21-year-old in the Turkish capital Ankara, said his father’s cryptocurrency investments, which were $ 5,000, have plummeted to $ 600 since introducing him to cryptocurrencies.

“Knowledge can’t get you very far in crypto,” Gocer said. “It’s the luck that counts.”

Another investor, a 32-year-old Mumbai IT worker, said he has about three-quarters of his savings – several hundred dollars – in cryptocurrencies. The value of him dropped by about 70-80%.

“This will be my last cryptocurrency investment,” he said, asking for anonymity.

Regulators in countries around the world have been evaluating how to create safeguards for cryptocurrencies that can protect investors and mitigate risks to broader financial stability.

The turmoil in the cryptocurrency market triggered by Celsius underscores the “urgent need” for cryptocurrency rules, a US Treasury official said last week.

Fong, the British investor who lost access to his cryptocurrency at Celsius, wants things to change.

“A little bit of regulation would be good in practice. But then I think it’s a balance,” he said. “If you don’t want too much regulation, this is what you get,” she added.

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