August 5, 2022
I have long been suspicious of cryptocurrency, and recent events seem to have borne out my skepticism.
Last fall, the crypto lender Celsius had more than $25 billion in assets and 1.7 million customers, some of whom were receiving an eye-popping (some might say Madoff-esque) 18 percent annual rate of return on their deposits. Well, last month Celsius filed for bankruptcy, reporting a $1.2 billion hole in its balance sheet and just $167 million on hand. As anxious investors raced to try to recoup whatever money they had left, Celsius froze their accounts.
According to the Wall Street Journal, one poor woman had “six figures’ worth of Bitcoin and Ethereum — her life savings — tied up in a Celsius account.” And she just learned that, had she read the terms and conditions on Celsius’ website, she would have seen a clause that reads “customers might not be able to recover the funds in their accounts” in the event of a bankruptcy.
Meanwhile, Tesla recently sold off 75% of its Bitcoin holdings. Tesla bought $1.5 billion worth of Bitcoin in 2021 and quickly sold off 10 percent as the currency’s value skyrocketed, but then Bitcoin lost half of its value.
If I can’t explain it, I’m not going to invest in it.