A Reddit user recently came out with the details of his six-figure loan that he applied for to invest in cryptocurrencies. He identified himself as a 32-year-old living in Abu Dhabi and posted a photo of his repayment schedule saying that he is currently running massive losses owing to the serial price declines in the crypto market.
The bank repayment document from the Emirates Islamic Bank shows monthly repayments of 8194 dirhams ($3067) until December 2021. The loan issued to the Reddit user, who goes by the username Cryptohomie, is listed as 338,000 dirhams ($126,500) with an outstanding balance of 393,296.80 dirhams ($147,200), interest included.
The uploaded photo was captioned, “Still three-and-a-half years to go until I’m freed. Until then, I’m working for nothing and I’m at 85% loss. I hope it gives you a lesson.”
According to the post to Cryptocurrency Subreddit, Cryptohomie bought Stellar, Neo, Litecoin, and Ethereum among other coins which have lost a lot of their value already, thanks to the bearish market conditions this year.
For instance, Neo has lost about 90% of its value. Litecoin and Ethereum has fallen by 85 and 80% respectively, since January. Moreover, the total market capitalisation of over 1800 cryptocurrencies has fallen to $200 billion from $800 billion.
The incident does not come across as a surprise, just as last year in December when “crypto mania” was at the peak, US securities regulators did warn about people making mortgages to buy digital currencies.
Regulators all over the world have often made people aware of so-called Initial Coin Offerings, often used by firms to raise quick funds.
A detailed analysis of the ICOs showed that 531 out of 902 ICO projects failed and calculated the rate of failure to be 59%. The rate is expected to grow as there seems to be some kind of correlation between the number of ICOs and retail investors.
The incidents in which investors incur huge losses are expected to rise given, the lack of regulation and stability in the cryptocurrency industry. In times like these, an investor should be on the lookout for suspicious ICOs and try to make wise financial decisions regarding investments in crypto assets.