7 Ways Crypto Investors Get Burned
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Despite the steep losses suffered in the past year by holders of cryptocurrencies and digital assets, many people continue to express significant interest in making such investments.
These investors appear undeterred by the much-scrutinized demise of FTX and the pending prosecution of the cryptocurrency exchange company’s founder and CEO, Sam Bankman-Fried, says Ali Derie, an attorney with the specialist law firm International Blockchain Legal LLP, which assists financial services industry participants engaging with blockchain and distributed ledger technology solutions.
Derie says the accusations of fraud and other abuses in the FTX case have scared some investors away from crypto assets, but not as many as one might think, and as such, financial advisors and other financial industry stakeholders cannot simply turn their backs on the emerging asset class.
Instead, Derie suggests, responsible financial advisors must keep abreast of cryptocurrency developments, if only to help them be on the lookout for future instances of fraud or manipulation that could potentially affect their clients. There is also a lot to be said for the power of the technology underlying digital assets, and in that sense, simply writing off the entire space might not be a prudent decision.
Derie shared his words of advice and warning during a live press event in New York hosted by the ALM Young Professionals Network in conjunction with ALM’s Law Journal Newsletters. The presentation also featured Blockchain Legal’s Eric Goldman and Aaron Krowne.
According to the trio of attorneys, cryptocurrencies and other digital ledger technologies are set to remain a front-page issue for the foreseeable future, and it is likely that at least some clients in any given advisor’s practice are going to be interested in crypto investments. As such, they shared a laundry list of issues that advisors should be aware of, including a growing number of nearly untraceable hacks of individuals’ crypto wallets.
See the slideshow for a rundown of all the ways an advisor’s clients can get burned by crypto.
(Image: Adobe Stock)
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