I was Cryptocurrency trading On the platform since last year. However, I have not been able to withdraw funds from my crypto wallet since May.
I have 55,000 dirhams ($14,976) Cryptocurrency value Locked in my wallet on this trading platform.
I bought Cryptocurrency with my credit card, hoping to get good returns on them and also because I didn’t want to link my bank account to my crypto wallet. The platform charged me an additional 3 percent fee for each credit card transaction.
Watch: What happened to the price of Bitcoin?
However, I am now having a file Credit card bill rising every month Because of interest and penalties for late and missed payments.
Will any credit card security programs be implemented? Also, would I earn any rewards for card transactions in my crypto wallet?
I tried sending several emails to the customer support team of the trading platform. However, there is no response.
My crypto assets have also fallen in value due to extreme volatility in the market. Can you suggest a solution to my financial problem? AK, Dubai
Debt Discussion Team Member 1: Steve Cronin, Founder DeadSimpleSaving.com
Your financial problems can be linked to three mistakes: trading, trading in cryptocurrencies, and trading with money borrowed from credit cards.
Trading is buying and selling an asset – that is, an asset – on a regular basis, rather than holding it for the long term.
There is a small percentage of people who earn good profits from long term trading. Most people do well once in a while and take very high pride in their successes.
Then they lose almost everything, but they are very calm about these losses.
Then, people who are new to trading are inspired by social influencers, advertisements of trading platforms and short trading winnings of friends.
It’s pure gambling and you should never repeat it, especially not with money you can’t afford to lose – and certainly not with borrowed money.
Cryptocurrencies are here to stay in one form or another, but they are still very risky investments.
The risk is significant both for the cryptocurrency you are trading or investing in, as well as the platform you are using to invest.
Cryptocurrencies can fall in value due to fraud, “pump and dump” schemes, failure to deliver on their promises, concerns about the value of cryptocurrencies in general or even entire investment markets turning away from risky investments as interest rates rise and people have less money to invest.
Cryptocurrency exchanges can run into problems, especially since few of them have been around for more than two years.
They may have technical issues or security issues. Perhaps they invested their own capital or investors bet cash in assets that were far more risky than anyone expected.
They may also face liquidity issues, as there is not enough cash to cover all withdrawal requests from the platform. Or, again, they may be fraudulent and steal your money.
The cryptocurrencies in your wallet on this trading platform may eventually be unlocked if the platform is purchased by a larger company or you find another way to regain its financial position.
Cryptocurrency – in pictures
You must then immediately sell whatever you have and use it to pay off a portion of your card debt. If the company is not responding, I would expect other people to be in the same situation. You should look for updates in the news and in web forums or social media.
Using credit cards to invest in anything is a very bad idea, unless you can pay off the entire card balance each month to avoid interest and late/non-payment fees.
Until then, you’re still paying an extra 3 percent per transaction. I understand your concern about linking a bank account to the trading platform, but you were able to use a bank account with only a small cash balance, which limits the risk of fraud.
Since you didn’t pay off the card balance every month, you were trading beyond your means and likely to end up in debt due to trading losses even if the platform didn’t freeze your account.
Each card provider has different terms and conditions about bonuses and consumer protection, so you need to read the documents related to your specific card.
However, I highly doubt that there is any protection or reward for investing in cryptocurrency or stock platforms. Such incentives would encourage risky behaviour.
You should now focus on figuring out how to pay off your card debt before you get older.
See if you can convert it into a personal loan at a lower interest rate. Find ways to earn extra income, cut your expenses, sell any assets you have, or borrow money from a relative.
Learn from your mistakes and warn others too, so that your business adventure becomes a useful life lesson instead of a complete waste of money.
Debt Discussion Team Member 2: Vijay Valecha, Chief Investment Officer, Century Financial
There has been extreme volatility in global risk markets this year.
Cryptocurrencies, with the addition of high-risk and high-risk beta, have been more muddled in their price reaction.
Major cryptocurrencies, including bitcoin and ether, have lost more than 60 percent this year. However, some, like TerraUSD stablecoin and sister token Lunasuffered a complete decline in its market value.
Reports of cryptocurrency withdrawal problems have become the norm this year.
This is primarily due to the liquidity crunch, as extreme price fluctuations make market makers averse to counterparty risk.
Most of the cryptocurrency platforms that provide instant wallet facilities are not subject to a specific regulatory act.
The inability of major developed market countries to properly categorize and regulate the crypto space has only provided more room for the growth of such exchanges.
I highly suggest that you check if the cryptocurrency trading platform you are using is registered with a regulatory body.
If it is registered within a local authority, you should contact the authorized personnel, keeping the platform provider in the loop.
You should also search the crypto investor community forum and try to confirm if this has happened with other clients of the exchange.
Possessing the power of collective bargaining may sometimes force the authorities to take “Suo Moto’s knowledge” of the matter.
In the case of the Terra/Luna crypto disaster, the South Korean authorities have asked Interpol to issue a red notice for the arrest of Co-founder and CEO of Terra Labs Do Kwon After the collapse of $40 billion in cryptocurrencies.
Investing in cryptocurrencies is often difficult and investors should always use properly regulated exchanges.
However, it is necessary to note that even a regulated exchange cannot do much to fulfill client obligations during the liquidity crisis of the cryptocurrency market.
A better alternative may be to invest money with a regulated trading broker or a Contract for Difference (CFD) provider.
With such entities, the withdrawal of capital/profits is relatively transparent and straightforward as client funds are not locked into cryptocurrency wallets.
Debt Discussion Team 3 Member: Carol Glenn, Conscious Finance Coaching
It is not recommended to use a credit card to purchase investments.
The only exception is to use the card to make the transaction and then immediately transfer from your checking account and clear the outstanding balance.
However, paying the extra 3 percent per transaction is also an unnecessarily expensive surcharge that you incur if you have the cash available in your bank account.
Focus on paying off the entire credit card balance as quickly as possible.
If you have income, cash or savings, I advise you to make at least the minimum credit card payments.
As you know, late and non-payment penalties and interest are expensive. The interest alone is likely to be more than 42 percent per year.
To add to the cost, interest charged on unreconciled amounts, along with incurring late payment penalties, results in interest being charged not only on the amount originally charged on your card but also on penalties and prior months’ interest.
Very quickly, you will find the debt multiplying.
If you don’t have savings to tap into, can you get a personal loan to pay off credit card debt?
You will save significantly on fines and interest by consolidating your debts in this way. Alternatively, do you have family or friends that you can borrow from, ideally at a low interest rate?
Credit card protection software will not help in this case. They usually offer coverage when you are unable to make payments due to a job loss.
The rewards you can earn with your credit card depend on your card type. You can check the terms and conditions in your credit card agreement. Usually, the rewards earned are listed in the bank’s online portal or mobile application.
Regarding accessing your crypto assets, if your emails are constantly being ignored by customer service, it’s time to escalate the issue.
Is there a formal complaint process defined on the platform? If so, follow the steps outlined there.
The next step then will be to file a complaint with the regulator with which the platform is registered. If you suspect fraud, this will be a police matter in the jurisdiction in which the platform is registered.
Debt Panel is a weekly column to help readers tackle their debt more effectively. If you have a question for the forum, write to it firstname.lastname@example.org
Updated: October 26, 2022, 5:00 AM
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