Yes, crypto is scum By Rachel Louise Ensign and Angel Au-Yeung One Sunday evening last month, Lucas Holcomb woke his pregnant wife. "Honey, we just lost $100,000," he told her. Mr. Holcomb had taken out a home-equity line of credit and deposited the proceeds with cryptocurrency lender Celsius Network LLC, which offered banklike accounts paying far higher rates than traditional lenders. He liked that the company had big-name institutional investors and touted safeguards meant to protect depositors from the crazy price swings common in cryptocurrencies like bitcoin. But last month, with crypto markets nosediving, Celsius told clients it was freezing all withdrawals. The Holcomb family's money was trapped. Celsius, which filed for bankruptcy protection this month, is one of many firms that cropped up in recent years promoting themselves as safe avenues for regular people to tap the moneymaking potential of crypto. Many customers are now getting a hard lesson in an age-old markets maxim and a modern one: Reaching for yield usually comes with big risk. And the crypto market in particular is still little more than a casino, lacking the regulatory oversight and legal protections of banks and brokerages. Like banks, these upstart platforms take deposits. Unlike banks, their deposits usually take the form of crypto. The crypto deposits -- which typically earn interest rates far above what a bank offers -- are used to fund loans to other customers. In theory, customers could leave money with these firms without betting on the volatile parts of the crypto market by relying on stablecoins, a type of cryptocurrency often meant to keep a peg to the dollar. For instance, a person could use dollars to buy a stablecoin like USD Coin, then park the coins at Celsius for 7% interest. Before the freeze, they could withdraw their USD Coin at any time and change it back into dollars. Celsius founder Alex Mashinsky often said his platform took deposits and made loans like a bank but was a far better deal for customers. "For 700 years of banking there was never an option," he said in an interview with a podcast host at a technology conference before the company ran into trouble. Celsius owes its users more than $4.7 billion, according to a filing by Mr. Mashinsky in bankruptcy court. It isn't clear if they will get any of it back. Mr. Holcomb expected to make $7,000 a year by keeping stablecoins at Celsius. When he told his wife about the account freeze, she asked him "Are you joking?" and fell back asleep. Mr. Holcomb stayed up most of the night, unsuccessfully trying to withdraw the funds. The next day, the 34-year-old turned to prayer. He realized he was too focused on money, he said, and resolved to help others by sharing on Reddit his continuing technical analysis of the company's situation. Mr. Holcomb recently paid back the home-equity line by tapping most of his cash savings. "My family's not going to starve to death," he said. "But losing $100,000 is never fun." Celsius didn't return requests for comment. "Acting in the best interest of our stakeholders, including our entire customer community, is our top priority," the company said in a blog post after filing for bankruptcy. Crypto has expanded steadily into the mainstream in recent years, showing up on Saturday Night Live, in Super Bowl ads, and plastered on the side of major sports arenas. Last fall, Pew Research Center found that 16% of Americans had used cryptocurrencies, up from 1% who had used bitcoin in 2015, a time when there were far fewer cryptocurrencies. Jack Wang got burned on crypto before, losing almost half his life savings when prices tumbled in 2018. He swore he would never touch it again. But then the pandemic hit and he found himself stuck at home. His father and brother had recently died, and Mr. Wang got laid off from his finance job. He soon turned to investing forums on Reddit and found a reignited base of crypto followers. "It was the only normal human interaction I had at that time," he said. By the end of 2020, crypto prices were soaring and Mr. Wang decided to jump in again, but using only stablecoins. " The second time, I felt like the technology and infrastructure was much more mature," he said. "Before, the use cases for crypto were more for people in the fringe communities." Mr. Wang, now 32 years old, eventually transferred $250,000 into a stablecoin called TerraUSD. He stored it on a platform called Anchor Protocol, which was backed by venture firms and offered annual yields of nearly 20% on the coin. He also invested in an insurance fund related to the coin. In May, TerraUSD slipped off its peg and plunged to nearly zero. Mr. Wang was out almost $500,000. Mr. Wang turned again to Reddit, where fellow investors were posting hotline numbers for suicide prevention. He responded to one of the threads by sharing how much money he had lost, hoping he could show others that they weren't alone. Mr. Wang said he was coming to grips with what happened. Over the Fourth of July holiday, he took a solo trip to Wilmington, N.C., and the surrounding Carolina beaches. Terraform Labs Pte. Ltd., the Singapore-based company behind TerraUSD and Anchor Protocol, declined to comment. A friend referred Dave Jachelski to brokerage and lender Voyager Digital Ltd. Mr. Jachelski started putting thousands into the platform in 2020 as he saved up stimulus payments and other extra cash during the pandemic. At that time, it paid interest rates up to about 10%. Mr. Jachelski recruited other friends and got at least $25 in bitcoin for each referral. Voyager marketed its accounts as protected by the government's banking insurance system because of the firm's partnership with a small New York bank. Mr. Jachelski, 33, grew nervous last month when Celsius froze withdrawals, but he was reassured by an email from Voyager Chief Executive Stephen Ehrlich telling customers their dollars were "as safe with us as at a bank." On July 1, Voyager froze withdrawals. Days later, it filed for bankruptcy protection. Voyager still hasn't repaid customers, but it says that people who were storing deposits in dollars will be able to access their money after "a reconciliation and fraud prevention process is completed." People who held crypto on the platform probably won't be as lucky. Mr. Jachelski is hopeful he will get back the $6,600 in cash that he left with Voyager. He's more skeptical about the crypto he deposited there, now worth about $4,000. "I've never had a bank tell me, 'I'm sorry, we're not allowing you to withdraw your money,' " Mr. Jachelski said. " Sometimes things are too good to be true."
If it is proven that his job at Coinbase made this early information available to him then it sounds like a very clear case. Is there any chance he figured this out through an analysis of information that was already public? Just the fact that he worked at Coinbase makes him appear guilty as one can be.
Bitcoin Millionaire Moves 14,000 BTC to an Unknown Wallet https://www.financemagnates.com/cry...etter&utm_medium=email&utm_campaign=25.07.22/
They need to prove that they are securities first. Also who cares about coinbase? The only exchange that will go out of its way to monitor it's customers transactions. I couldn't care less if the whole company goes to prison
Never do or say anything you would not want on the front page of the newspaper. itz ok, im not with the irs
How would you like it if I came inside your house and started following you around recording everything you are doing? Same principle