August Has Been a Horrible Month For Crypto
On Aug 05, 2022
Cryptocurrencies have been on a downward spiral since the beginning of August. Bitcoin, Ethereum, and Litecoin have all seen significant drops in value. Experts are attributing the devaluation to a number of factors, including uncertainty surrounding SEC regulations and the increasing popularity of blockchain technology. Many investors are hoping that the market will rebound soon; however, others are predicting that the crypto bubble has finally burst.
Another day, another crypto disaster. The cryptocurrency market is not immune to the negative effects of regulatory uncertainty and illiquidity, as evidenced by hacks from cross-chain bridge hacks draining hundreds of millions of dollars in customer funds, SEC enforcement action against crypto Ponzi schemes, and more. And that’s not even counting the incessant stream of scams and frauds that seem to plague the space on a daily basis. It’s no wonder that so many people are hesitant to get involved in cryptocurrency. Unfortunately, there doesn’t seem to be any end in sight to the crypto rollercoaster.
It’s been a tough year for cryptocurrencies. Early, the market was rife with optimism, with prices soaring to new all-time highs. But since then, fears around tightening monetary policy and a lack of liquidity have set in, leading to huge declines. Now, a new report adds to the bad news, as it details a series of devastating crypto exchanges that have been hit by hacking, fraud, and other disasters. The report makes for grim reading, and it’s sure to add to the already substantial losses that investors have suffered this year.
The Securities and Exchange Commission (SEC) filed a civil lawsuit against some individuals for operating a fraudulent cryptocurrency based pyramid scheme that gathered more than $300 million in funds from investors. The SEC alleges that the defendants promoted a “crypto disaster relief” investment program that was actually a Ponzi scheme, misappropriating funds and using them for personal expenses. If proven, this would be one of the largest crypto-related frauds to date, illustrating the vulnerability of digital assets to fraudulent activity.
Forsage, a decentralized smart contract platform that operated on the Ethereum, Tron, and Binance blockchains, has been hit by a major crypto disaster. The scheme, which claimed to allow millions of retail investors to enter into transactions via smart contracts, has lost over $50 million worth of ether due to a flaw in its code. The Forsage team has acknowledged the flaw and is working on a fix, but in the meantime, the platform has been shut down. This is a major blow to the nascent world of decentralized finance, and it remains to be seen how Forsage’s users will recover from it.
The SEC claims that for more than three years, the setup functioned like a typical scheme, in which investors earned profits by bringing new people into the operation. According to the SEC’s complaint, the defendants promised annual returns, as well as monthly dividends. However, the vast majority of the money raised was used to pay older investors, rather than being invested in any actual business venture. As a result, many investors have lost their entire investment, and the defendants are now facing charges of securities fraud.