Cryptocurrency used to be touted as the “future of money,” as people scrambled to understand Bitcoin, NFTs and more. Now, cryptocurrency scandals are making headlines, and it’s taking many investors down in their wake.
What is cryptocurrency?
Cryptocurrency is a digital currency designed to work as a medium of exchange through a computer network. It’s not reliant on any central authority, such as a government or bank. Many people have bought, sold, and traded digital currencies through centralized cryptocurrency exchanges, such as Bitcoin and Etherium. The transactions and records were verified and maintained using cryptography. You can learn more here.
What is the problem with cryptocurrency?
Unfortunately for investors, cryptocurrency exchanges are crashing all around us as FTX, the centralized cryptocurrency exchange, has collapsed. Worse, FTX has been accused of embezzling customer assets. The founder of FTX, Sam Bankman-Fried has been arrested and charged with eight counts of wire fraud, securities fraud, and conspiracy. Investors who held their money on FTX’s exchanges have lost billions of dollars, and news outlets are likening him to the infamous Bernie Madoff.
Sam Bankman-Fried Photo credit: Fox Business
Following the collapse of FTX, issues at other cryptocurrency exchanges came to light. For example, the popular exchange Gemini launched a product called Gemini Earn. They purportedly advertised that investors could earn interest on crypto they staked or loaned for profit. But when Gemini Earn got to the brink of bankruptcy, they froze all Gemini Earn accounts. This resulted in the loss of nearly a billion dollars in digital assets lent by Genesis Earn to Genesis.
The exchange BlockFi filed for bankruptcy and attempted to blame its financial woes on FTX. However, the Securities and Exchange Commission (SEC) investigated these claims and discovered that BlockFi had violated security laws by making “false and misleading statements for more than two years.”
These exchanges misrepresented their financial strengths and downplayed the risks of having a portfolio with them. At worst, these exchanges were nothing more than a sophisticated Ponzi scheme. As a result, investors have lost tens of billions of dollars.
Have your finances been compromised by a cryptocurrency exchange?
A sudden financial loss can cause a lot of pain and suffering. When this loss is due to the negligence of another person or entity, your future can feel even more uncertain.
If you suffered a loss of $10,000 or more as a result of any of the following companies freezing your account, we may be able to help. These companies are:
- Gemini Earn
- FTX
- BlockFi
- Voyager
- Celsius
No one should have to suffer the financial ramifications of false and misleading institutions. If you meet the above criteria, call Allen & Allen today for a free consultation, at 866-308-1307.
