“I was probably making $ 100 a week,” said Fong, a 29-year-old civil aerospace worker living in the central English city of Derby. “That covered my shopping.” Now, however, Fong’s encryption – about a quarter of its portfolio – is stuck in degrees Celsius. Sign up now for FREE unlimited access to Reuters.com Register The New Jersey-based cryptocurrency lender froze withdrawals for its 1.7 million customers last week, citing “extreme” market conditions, causing a sell-off that wiped out hundreds of billions of dollars in cryptocurrency paper value. read more Fong’s long-term cryptocurrency holdings have now fallen by about 30%. “Definitely in a very awkward position,” he told Reuters. “My first instinct is to just withdraw everything,” he said. The Celsius boom followed the collapse of two other major brands last month that shook an already cryptocurrency sector, as soaring inflation and rising interest rates are causing stocks and other higher-risk assets to flee. read more Bitcoin fell below $ 20,000 on June 18 for the first time since December 2020. It has fallen about 60% this year. The total cryptocurrency market has shrunk to about $ 900 billion, from a record $ 3 trillion in November. read more The downturn has left individual investors around the world bruised and confused. Many are angry with Celsius. Others vow never to invest in encryption again. Some, like Fong, want stronger oversight of the freeway sector. Susannah Streeter, an analyst at Hargreaves Lansdown, likened the turmoil to the collapse of dotcom stocks in the early 2000s – with technology and low-cost funds making it easier for individual investors to access encryption. “We have this clash of smartphone technology, transaction applications, cheap money and an extremely lucrative asset,” he said. “That’s why you’ve seen a meteoric rise and fall.” Reuters Graphics ‘STEPS IN THE DARK AT 2 AM’ Encryption lenders, such as Celsius, offer high interest rates to investors – mostly individuals – who deposit their currencies on these sites. These lenders, mostly unregulated, then invest in deposits in the wholesale encryption market. read more Celsius’s problems appear to be related to its investments in wholesale cryptocurrencies. As these investments became sour, the company was unable to respond to customer acquisitions by investors amid the wider crypto market recession. read more The freezing of the acquisition in degrees Celsius was like a small bank closing its doors. But a traditional bank, under the supervision of regulators, would have some form of protection for depositors. One of those affected by the Celsius freeze was 38-year-old Alisha Gee in Pennsylvania. Gee has invested “every last bit” of its paychecks in encryption since 2018, which have accumulated in a five-digit amount. She has $ 30,000 in Celsius deposits – part of her total available cryptocurrencies – earning $ 40-100 a week, which she hoped would help pay off her mortgage. Just a week ago, Gee received an email from Celsius saying she could not make withdrawals. “I was just walking in the dark at 2 in the morning, back and forth,” he said. “I believed in the company,” Gee said. “I do not feel good about losing $ 30,000, especially the ones I could have put in my mortgage.” Gee said she would continue to use Celsius, saying she was “loyal” to the company and had not had any problems in the past. Celsius CEO Alex Mashinsky wrote on Twitter on June 15 that the company was “working non-stop”, but gave few details on how and when the takeovers will be repeated. Celsius said Monday it aimed to “stabilize our liquidity and operations.”
PRISONS
For some, the enthusiasm for encryption is undiminished. “I’ve seen a lot of bear market cycles so far, so I avoid any spasmodic reactions,” said Sumnesh Salodkar, 23, of Mumbai, whose cryptocurrency deposits are down but still positive. For others, warnings from regulators around the world about the dangers of getting involved in encryption have come true. Halil Ibrahim Gocer, a 21-year-old in the Turkish capital Ankara, said his father’s investments in $ 5,000 cryptocurrencies had fallen to $ 600 since he introduced him to encryption. “Knowledge can only go that far in encryption,” Gocer said. “Luck matters.” Another investor, a 32-year-old IT worker in Mumbai, said he had put three-quarters of his savings – several hundred dollars – into encryption. Its value has fallen sharply by 70% -80%. “This will be my last investment in cryptocurrencies,” he said, speaking on condition of anonymity. Regulators in countries around the world are working out how to build encryption protective railings that can protect investors and reduce risks to wider financial stability. The cryptocurrency market turmoil triggered by Celsius underscores the “urgent need” for encryption rules, a US Treasury Department official said last week. read more Fong, the British investor who has lost access to his Celsius degree encryption, wants things to change. “A little adjustment would be good, basically. But then I think it’s a balance,” he said. “If you do not want too much regulation, you will have it,” he said. Sign up now for FREE unlimited access to Reuters.com Register Report by Tom Wilson and Elizabeth Howcroft in London, Nupur Anand in Mumbai and Ece Toksabay in Ankara. Edited by: Jane Merriman Our role models: The Thomson Reuters Trust Principles.
