Latest cryptocurrency collapse hitting investors big and small
SAN FRANCISCO -- The dramatic collapse of cryptocurrency market and in particular a company tied to a major crypto exchange is having a widespread impact on investors.
FTX is one of the biggest crypto exchanges in the country. Recently valued at $32 billion, it is now filing for bankruptcy. Its customers currently cannot withdraw any of their money out of the platform.
The collapse of FTX is hurting big and small investors.
"If I had an extra $40,000, that would make finding an apartment in San Francisco a lot easier right now," said crypto investor Kimberly, who declined to provide her last name.
Kimberly was on the hunt for a new apartment since her landlord was selling the condo she was leasing. She said she lost roughly $40,000 this year out of the $50,000 she put into her cryptocurrency investment.
"I'm definitely grieving that loss because I did the thing that you're not supposed to do. I did invest my savings," said Kimberly.
She did not use FTX as an exchange.
But cryptocurrency experts said the collapse of FTX, the second biggest crypto exchange, will further push bitcoin and ether prices down, hurting investors and the industry as a whole.
"2022 is a bad year for cryptocurrency from the beginning to the end. It's lost 2/3 of the market value," said Professor Ahmed Banafa, who's a tech expert and teaches about cryptocurrency at San Jose State.
He said this is the fourth crypto crash in the last 12 years and it's going to further hurt the industry's credibility.
"Too much money will create greed and no oversight will make people make bad decisions," said Professor Banafa.
As a crypto exchange, FTX provided a marketplace for people to buy, sell, and store digital currencies.
"All the withdrawals are stuck. I can't get the money out," complained Evan Luthra, an entrepreneur and crypto investor.
Luthra is one of the thousands of investors who used FTX and tried to withdraw money from the platform this week. But they could not get their money back.
"I thought it was very, very secure. I have lost almost a couple of million dollars. I am probably never going to trust any exchange anymore. I'm only going to keep money in my hard wallet. So this is a very, very big lesson for me," said Luthra.
"The best-case scenario for [FTX customers] is to get pennies on the dollar," said Professor Banafa.
Kimberly said the latest crash left her with about $10,000 in her crypto investment. At this point, she said selling her bitcoin and getting out is not an option. She believed bitcoin prices will eventually go back up.
"If I hold on to it and it goes high again, then I have the opportunity to recoup. At least maybe I don't lose the money," said Kimberly.
Kimberly and tech experts said the big lesson here is treat crypto investments like gambling in Las Vegas, only play with the money you're willing to lose.
Industry experts believe this latest crash will prompt the government to start regulating the cryptocurrency market. Right now, there's very little oversight over cryptocurrency.