Has the long-foretold cryptocosm arrived? It’s hard to say given the stop/start tendencies of the recent crypto-collapse, but one scary thing is for certain, many crypto lenders are blocking access to customer assets. Kyle Barr reports at Gizmodo:
The number of crypto lending platforms that actually let users take their crypto home with them is getting progressively smaller. One company even reported its users were draining their accounts of close to $198 million in total over the past three weeks.
CoinLoan announced Monday it was putting a big hold on users’ abilities to withdraw most of their crypto assets. That same day, Vauld essentially gave its customers a paternal pat on the head, telling them “it’s for your own good,” while it nixed withdrawals altogether. The latter company is reportedly looking for its own “Daddy Warbucks” to help the company meet the harsh, cold hell of the ongoing “crypto winter.”
CoinLoan told users on its blog it was restricting the total amount of daily withdrawals to just $5,000 in a 24-hour period in an attempt to limit the flood of withdrawals to a bare trickle. The company said it would lift the limitation “once the market situation allows it.”
It’s a near 99% reduction in the overall withdrawal limit from where it originally stood at $500,000. The company went on to pat themselves on the back for not halting all withdrawals whatsoever “like some other companies have done,” adding “the users who have entrusted us with their funds are our biggest priority.”
Crypto users are looking to abandon some ships en-mass, and companies are using cork stoppers to plug the holes in their sinking vessels. Vauld CEO Darshan Bathija wrote on the company blog that its suspension of withdrawals was due to “a combination of circumstances such as the volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate which has led to a significant amount of customer withdrawals in excess of a $197.7 [million] since [June 12].”
These maneuvers by crypto lenders could lead to modern-day bank runs as everyone tries to withdraw their cryptocurrencies at once.
Action Line: Hopefully you haven’t been speculating in cryptocurrency and instead have built a portfolio focused on income-generating stocks and bonds. If you haven’t, and need help working on a portfolio that makes you an investor rather than a speculator, I’d love to talk with you.
