A reality check
23/01/2023
An array of cascading red graphs across various crypto exchanges has sent investors into a frenzy. The current crypto meltdown has been a reality check for many investors who were looking to make a quick buck from the digital currency. Not only has crypto seen some of its worst months in terms of valuation, but it has also betrayed faithful crypto investors who thought these assets could offer them some economic stability. But how did it come to this? Why is Bitcoin, a digital currency that was being heralded as the next big thing, now hanging by a thread with an uncertain future? What will be the future of crypto investors in India and globally? US-based cryptocurrency lender Genesis Global Capital became the latest company to file for bankruptcy protection after the collapse of crypto exchange operator FTX, NHK World reported. The company, plus its subsidiaries filed for Chapter 11 bankruptcy protection with a US court on Thursday. Company officials blame the failure on the low liquidity of the crypto market caused by last November's collapse of FTX, and other abnormal developments in the industry in recent months.
Crypto lender Blockfi also filed for bankruptcy protection in November. Leading crypto exchange operator Coinbase halted its Japanese operations this month, citing the poor business environment. Earlier, in November, Genesis halted the customer withdrawals after the downfall of FTX and even negotiated with the creditors and tried to secure fresh capital since. The crypto lender earlier this month laid off 30 percent of its staff.
Everyday investors across the globe have also been left nursing billions of dollars in cumulative losses, and now regulators are forcing lenders to either meet the more stringent standards required in traditional financial markets or face massive repercussions. Either way, the heyday is over. Some investors still believe the industry could make a comeback — albeit not in its pre-crash form. For those willing to undergo the process, a regulated version of crypto lending may foster a higher degree of investor safety, using existing securities laws to keep companies in check.
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