Daniil Pemberton believed in FTX – also because the media and influencers recommended the platform. The collapse of FTX has shaken its confidence in the crypto industry.
The 26-year-old lost access to around $14,000 (13,170 euro) to his FTX account, which also included Bitcoin and Ether.
Going forward, he plans to focus on stocks and index funds.
On November 8, when Daniil Pemberton saw the headlines about the collapse of the Sam Bankman-Fried crypto exchange, he attempted to withdraw funds from his FTX account. He soon realized that was impossible.
The 26-year-old student residing in the Netherlands said he had 1.25 Ether and 0.64 Bitcoin stored in his account, which at the time were worth around $13,825 in total.
When he tried to initiate a withdrawal, the app said the transaction was pending, but nothing more happened. When Pemberton checked the addresses of the cryptocurrency wallets he was trying to send money to, his balance remained at zero. Business Insider reviewed these documents.
“The technology itself, which is cryptocurrency, looks good, but the problem is the institutions around it,” Pemberton told Business Insider. They are the ones that undermine trust, because at any time a platform could make the wrong decision – which in turn can lead to bankruptcy, which in turn causes everyone to lose their money. There is no safety net, he adds.
FTX filed for bankruptcy on November 11, and Bankman-Fried resigned as CEO. The US Securities and Exchange Commission (SEC) now accuses him of developing a year-long scheme to defraud investors.
New CEO John Ray III said that FTX did not keep accounts properly and “there were no records”. FTX also reportedly transferred billions of dollars in client funds to Bankman-Fried’s Alameda crypto hedge fund.
Pemberton lost faith in crypto companies. “I’m skeptical about who to entrust my money to.” Although it is possible for FTX users to recover some of their funds in bankruptcy proceedings, experts warn that it could take months or years, if at all.
One of the main reasons Pemberton chose FTX to store his cryptocurrency is because it has been praised by everyone, including many YouTube financial influencers he follows. “The New York Times wrote about Sam Bankman-Fried, as did other well-known media outlets and individuals. I was confident that they had done their research thoroughly and would not hype unchecked. “, said Pemberton.
The promise of FTX’s high interest rates also attracted investors, largely because they remained high at a time when other platforms were offering lower yields. “In retrospect, it was a stupid decision. I have become greedy.
Conversion to traditional systems
Due to the collapse of FTX, Pemberton said he lost around 60% of his entire portfolio, including stocks and holdings on other exchanges, including Binance. Going forward, he plans to focus more on traditional stocks.
It will focus more on equities, he says. “Equities have more security in case something goes wrong.” Johnson & Johnson, Coca-Cola and the Vanguard S&P 500 ETF are all on its list as long-term stable investments, Pemberton said. “I was so shocked by all this that I don’t want any more uncertainty. I will also invest more in index funds and bonds.
Disclaimer: Stocks, cryptocurrencies and investments are always associated with risk. A total loss of the invested capital cannot be ruled out either. Articles, data and forecasts published do not constitute an invitation to buy or sell securities or rights. They are also not a substitute for professional advice.
This article was translated from English by Melanie Gelo. You can read the original here.
This article was updated on 12/25/2022 and was first published on 12/24/2022.