A crypto investor bought tens of thousands of dollars from this altcoin project through Voyager. The company filed for bankruptcy last week and suspended withdrawals on its platform. The investor we are talking about says his money is not insured and may now be lost. The said investor talks about his experiences. We have prepared it for our readers with his narration.
“I bought from this altcoin project and invested in Voyager”
Last year, a friend of mine told me about an altcoin project that provides a 9% APY interest rate through an investment app called Voyager. I was skeptical at first. Cryptocurrencies were very volatile and companies looked very sketchy. I rejected the idea until my friend told me that the currency was a stablecoin. That means its value hasn’t changed. The currency in question, USDC, was tied to the US dollar (i.e. 1 USDC was worth 1 USD). So Voyager basically offered a very high yield savings account.
Now more curious, I decided to put in some money. Less than $200 and I’ve seen what happens when the moon is up. Typically, to make money with crypto, you have to buy the crypto before withdrawing it and sell it at a profit. However, with USDC purchased through Voyager, I thought I had bought a cryptocurrency with a stable price. My assumption was that, like any bank, Voyager wanted my money and was willing to pay me to keep it with them in USDC.
At the beginning of September 2020, I saw my first interest deposit: 1.50 USDC ‘Reward’. I can then sell and buy $1.50 USD. So I decided to add more money. And then thousands more. Over the past two years, I’ve gained steady, high yields. I regularly withdrew money from my Voyager account to pay bills.
It most recently froze withdrawals on Celsius, another crypto app, on June 10. So he announced that he had knocked down the first domino in an industry-wide semi-collapse. Just two days ago I deposited USD. As you can read on Kriptokoin’com, Voyager did the same on July 1st.
Crypto was too good to be true
Voyager filed for bankruptcy protection last week. And like the other 3 million crypto investors, my funds are inaccessible. When I try to sell my USDC and withdraw my money, a message pops up stating that transactions are currently disabled. If it’s true that the money is gone, as many feared, that would mean I’ve lost tens of thousands of dollars that I could have used to pay off my student loans.
“If I had the chance, would I do all this again? No way”
Platforms like Voyager have made it easy to buy these funds. Instead of going through the complicated process of creating my own cold wallet to store my crypto, I could create an account on Voyager and use the app like any other bank or crypto exchange. It also didn’t require much knowledge of how cryptocurrency works.
And it looked safe. I believed my money was insured by the Federal Deposit Insurance Corporation (FDIC), because Voyager said it was. I was so excited that I told my friends and family. I even wanted to write about it.
The cryptocurrency market has proven to be volatile. But for some time, stablecoins like USDC have been a solid way to raise money amid rising inflation and weak returns on traditional savings accounts. Maybe it still is. It’s like flying in the jet stream of crypto mania without facing the same risks. Or so I thought. At least in my case it was too good to be true. Maybe crypto is here to stay, but for now I’m done joining.
“Altcoin projects and the crypto market are still the Wild West”
It is now clear that investors have never seen the full picture. The source of the claim that the cash held on Voyager is insured by the FDIC is Metropolitan Commercial Bank. The bank made a statement stating that the dollars in users’ accounts will be protected only in the event of the failure of the Metropolitan Commercial Bank, not Voyager.
This means that there is a good chance that my money is gone, or that I will somehow only get a fraction of what I once had. I am in a uniquely privileged position that gives me some sanity even though it hurts. I have no children, I’m in my early 30s and I was packing to travel to cheaper countries. For some, the stakes are much higher. Last week, I saw a tweet from a panicked single mom who had $70,000 saved on the app to buy a house. Many people have six or more digits like I do.
The FDIC is now investigating Voyager for alleged funds being insured. I feel a little less stupid and a little more angry. Yet there is very little I can do. I have accepted the terms and conditions that prevent users from participating in class actions.
I learned my lesson. I will not invest in Bitcoin or altcoin projects again until there is sufficient government regulation. Also, I will keep cryptocurrencies in a personal wallet, not an online exchange. When I invest again, I’ll be back in index funds, CDs, real estate, and a regular high-yield savings account. No matter how painful it is to see my savings depreciate over time. USDC and Voyager seemed like a conscious choice. But now I see that I didn’t have the information I needed to make a wise decision.
“I still wonder if there is a future for crypto”
Bill Gates said he thinks cryptocurrencies and NFTs are ‘100% based on the bigger idiot theory’. Really using cryptocurrency as currency may one day become mainstream. It is possible that this too makes it dependent on something more legitimate and real. But I don’t think we’re very close to that.
Crypto is very unknown, very open to hackers. It’s also too complex for the average person accustomed to easy-to-use technology. The next time I see the overly high APYs and jargon that complicated, I’ll barely Google it, run the other way.
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