London Daily

Focus on the big picture.
Monday, Aug 25, 2025

Crypto bankruptcies threaten customer life savings

Crypto bankruptcies threaten customer life savings

A judge will hear a request to honor Voyager Digital customer withdrawals

Some crypto investors are on the edge of financial ruin after trusting their nest eggs to two unregulated crypto marketplaces that went bankrupt.

Many put their life savings into virtual currency only to see their money frozen while the courts decide the fate of their investments.

Their plight has members of Congress calling for investor education and greater regulation.

Senators Debbie Stabenow, D-Mich., and John Boozman, R-Ark., introduced a bill Wednesday to give the Commodity Futures Trading Commission new tools and authorities to regulate digital commodities.

The logo of the crypto company Celsius on a computer screen June 14, 2022.


New laws will come too late for customers of Celsius Network and Voyager Digital.

One investor named Donald said he feels "completely ashamed and embarrassed" for sinking $31,000 into Voyager Digital Holdings.

"Losing this money with no end in sight has been unbearable for my family and I," Donald said. "I wake up most nights and just walk up and down the stairs contemplating on my own mistakes and wondering if this will ever end."

John Dalisay, who is paralyzed from the neck down, sent a letter to a judge saying he is depressed and unable to work after his life savings were frozen.

"I already suffered a tragic loss of my ability to ever walk again and did my best to be strong and fight to start over with my life," Dalisay wrote. "I feel humiliated and defeated."

Dalisay invested money from his $8-per-hour job at Celsius Network.

"I do not seek luxuries, your honor," he wrote. "I only wanted to be able to afford basic necessities. Please help me be whole again as this situation Celsius created is wreaking havoc on my mental health."

Voyager customers asked a judge to unfreeze their accounts. A hearing on that motion is scheduled for today.

Crypto lender Celsius and crypto broker Voyager Digital filed for Chapter 11 bankruptcy in July, freezing their customers’ assets. Celsius has 1.7 million customers and $6 billion in assets. Voyager counts 3.5 million users and over $5.9 billion of cryptocurrency assets.

Corporate bankruptcies are generally battles between rival groups of Wall Street investors backed by lawyers who often bill $1,000 or more per hour.

The Celsius and Voyager cases are exceptions. Everyday investors are flooding the courts with desperate pleas asking for their money back.

"There’s rarely enough money to cover the investor," said Melanie Senter Lubin, president of the North American Securities Administrators Association, who testified last week at a Senate Banking Committee hearing on crypto fraud.

"If those investors are considered unsecured creditors, they’re going to be put in the pool with everybody else, and they’re typically at the end of the line."


Safer than a bank?


Celsius and Voyager promoted the safety of their investments.

"Celsius stated overwhelmingly … that putting our funds into [their] custody was much safer than having it at a regular bank account," wrote Paul Niehe, who transferred his pension savings into crypto.

Ryan Hourigan invested a portion of his paycheck into Voyager every month on top of rolling his life savings into his account.

"I used Voyager to replace my savings account as it was advertised as FDIC insured," Hourigan said. "I am now filled with regret for doing so and fear that I pretty much lost everything for trusting this company."

"They made astonishing claims, like offering up to 20% interest while claiming they were FDIC insured and quote ‘safer than banks,’" Sen. Elizabeth Warren, D-Mass., said at last week’s hearing. "No risk. Twenty percent return. That was a lie from the start."

This May 4, 2021, file photo shows the Federal Reserve building in Washington.


The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve have ordered Voyager to stop making false and misleading statements concerning its FDIC deposit insurance status and to take immediate corrective action.

Celsius allowed customers to get loans in real dollars by using their crypto holdings as collateral. Customers could also earn interest by lending their deposited coins, according to the company's white paper.

Voyager offered a secure way to trade over 100 different crypto assets using a mobile app and advertised rewards on more than 40 cryptocurrencies, the company's white paper said.

At least one person has turned to crowdfunding for help. Eduardo Dorrance wants to save his family’s animal rescue with a GoFundMe campaign. His family is a month away from losing the business.


Crypto winter
The Binance Exchange website on a laptop computer arranged in Dobbs Ferry, N.Y., Feb. 20, 2021.


Crypto investors who used other platforms are not immune from losses.

Cryptocurrencies lost an estimated $2 trillion in value since peaking last year in a market collapse nicknamed the "crypto winter."

Bitcoin, the biggest cryptocurrency, topped out at $68,789 per coin Nov. 10, 2021, before falling to a low of $17,709 June 18, according to CoinMarketCap data.

"It’s very important that people understand how a particular investment works, how they could lose money in the investment, what they pay for that investment, and what recourse they have," Gerri Walsh, senior vice president of investor education at the Financial Industry Regulatory Authority, said.

"When this is happening outside the space of regulation, the recourse of investors can be difficult."

Walsh testified at the Senate hearing.

Comments

Oh ya 3 year ago
It is not up to the government to baby sit the stupid greedy people. The stupid people heard what they wanted to hear 20% interest.. They went to the crypto casino and lost. Stop whining

Newsletter

Related Articles

0:00
0:00
Close
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
Nurse who raped woman continued working for a year despite police alert
Drought forces closures of England’s canal routes, canceling boat holidays
Sweet tooth scents: food-inspired perfumes surge as weight-loss drugs suppress appetites
Experts warn Britain dangerously reliant on imported food
Family of Notting Hill Carnival murder victim call event unmanageable
Bunkers, Billions and Apocalypse: The Secret Compounds of Zuckerberg and the Tech Giants
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
×