Bad News for 500K Crypto Investors: They Don't Own Their Accounts (msn.com) 178
"More than half a million people who deposited money with collapsed crypto lender Celsius Network have been dealt a major blow to their hopes of recovering their funds," reports the Washington Post, "with the judge in the company's bankruptcy case ruling that the money belongs to Celsius and not to the depositors."
The judge, Martin Glenn, found that Celsius's terms of use — the lengthy contracts that many websites publish but few consumers read — meant "the cryptocurrency assets became Celsius's property."
The ruling underscores the Wild West nature of the unregulated crypto industry. On Thursday, New York Attorney General Letitia James moved to impose a kind of order, or at least legal repercussions, on Celsius founder Alex Mashinsky, whom she accused in a lawsuit of defrauding hundreds of thousands of consumers.... And while Glenn's ruling won't affect FTX, whose terms of use were different, some analysts saw the ruling as spreading beyond Celsius.
"There are many other platforms that feature terms of use that are similar to Celsius's," said Aaron Kaplan, a lawyer with the financial-focused firm of Gusrae Kaplan Nusbaum and co-founder of his own crypto company. Customers need to "understand the risks that they are taking when depositing their assets onto insufficiently regulated platforms," he said.
The ruling underscores the Wild West nature of the unregulated crypto industry. On Thursday, New York Attorney General Letitia James moved to impose a kind of order, or at least legal repercussions, on Celsius founder Alex Mashinsky, whom she accused in a lawsuit of defrauding hundreds of thousands of consumers.... And while Glenn's ruling won't affect FTX, whose terms of use were different, some analysts saw the ruling as spreading beyond Celsius.
"There are many other platforms that feature terms of use that are similar to Celsius's," said Aaron Kaplan, a lawyer with the financial-focused firm of Gusrae Kaplan Nusbaum and co-founder of his own crypto company. Customers need to "understand the risks that they are taking when depositing their assets onto insufficiently regulated platforms," he said.
Yawn (Score:5, Insightful)
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They invested in education, specifically to learn that you can get nothing for something. ... is what I would say if I didn't know most of those "investors" are just plain folk just who were hoping to get a little break in life and trusting that the people who make the technocratic class work for the benefit of everyone.
Re:Yawn (Score:5, Informative)
Hopefully at least a few people (whether investors in this particular scam, or not) are learning that maybe, just maybe, financial regulations exist for a good reason.
Re: Yawn (Score:3)
Re: Yawn (Score:5, Informative)
The main reason for exchanges to be needed is that all crapcoins have laughably low transfer speeds and ridiculously high transfer fees. An exchange can short-circuit that by pooling everything together and not doing the actual transfers on the blockchain. The only time an exchange may go to the blockchain (but does not have to) is when a victim/customer wants to withdraw their funds or when they pay in crapcoins. That is also one of the reason why it is typically very easy to buy in at an exchange with real money but far harder to get real money back out.
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It's not an exchange, it's a "lender." It's right in the summary. Lending stuff that doesn't belong to you is generally frowned upon. Lending stuff that you don't have also.
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Not quite. The devil is in the details.
Banks work on lending stuff that was lent to them for the explicit purpose of lending it out. (as spelled out in your account contract). Why else would they accept the liability for storing your money?
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Do you think the average person knows what a wallet is? Or has the technical ability to use one? Or has the technical knowledge to secure and back it up effectively, and the computer on which it resides? Especially given that a major crypto developer just proved he couldn't as he lost over 3 million USD to a compromised PC? Banks exist for a reason- to safeguard and protect money. The same reasons you don't hide your dollars in your mattress are the reasons why people would use an exchange.
Re:Yawn (Score:5, Insightful)
One of the core reasons financial regulation exists is to protect non-experts. It is actually not good for society and the economy when regular people lose all their savings. Usually, there are very little and only rather obvious scams for regular people to "invest" their money outside the protection of regulation. The accomplishment of the crapcoin industry undoubtedly is that they managed to scale up their scam so fast that regulation did not catch up to them before they began cashing out massively and falling left and right. Of course, laws on fraud may and will still get some of them, but that is far too late for those non-expert "investors" that were arrogant enough to think they understood what they were "investing" in.
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The problem with this education is the same as with the rest: A lot of people get it, but won't learn a thing.
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Unfortunately true. Most people are not even really capable of learning facts. And mechanisms? Forget it. Apparently only about 10...15% of the population are "independent thinkers" and these are the only ones that can really learn things with reasonable speed and effectiveness. The rest either follows what those around them do or have their own fantasies about how things work.
As a corollary of this mess and others the human race is in, this mix does not work and this installment of the human race is an obv
Don't forget. (Score:2)
Fortune favors the brave. [yahoo.com]
Re:Don't forget. (Score:5, Informative)
But not the stupid.
There is a fine line between bravery and stupidity. That line usually is knowing when to be it and when not to.
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There was tons of foresight.
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There were plenty of boring old grandpas, paranoid geeks, and invested-in-the-status-quo investors sounding all these warnings.
Such voices simply didn't have the emotional impact of Matt Damon.
Of course, boring old grandpas, paranoid geeks, and successful investors are all precisely the sort of people one should listen to in matters like these. But the natural rebelliousness and naivete of youth just doesn't see it that way.
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And how exactly is an endorsement from Matt Damon relevant? That guy's an actor. He gets his money for looking presentable, learning lines and making faces. Which part thereof screams "I know how to handle money?"
If anything, celebs are generally notoriously bad at handling money sensibly.
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Fortune favors the brave, while Forbes caters to the stupid. Hence, a plethora of articles about cryptocurrency.
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Fortune favors the wealthy.
Destruction favors the brave.
While it's true that only a brave knight can slay the proverbial dragon and claim its horde... history tends to overlook the corpses of the hundreds of equally brave and skilled knights that fell before one was finally also sufficiently lucky to succeed. Not many knights are famous for *two* dragon-slayings.
High risk investments are indeed where all the big money is to be made, but they're called high risk precisely because you will almost certainly l
Let's all give our real money to scammers! (Score:5, Insightful)
Let's all trade our real money for some digital bits and give it to scammers!
Wow! If you are holding crypto you are about to find far far fewer greater fools to sell to.
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And I was already puzzled by gift certificates and why people are stupid enough to buy those things.
I mean, think about it. What do people say when buying these? "Here is 50 bucks. This is legal tender anywhere. Could you rig it for me that I can get a token that is only redeemable in here and only for a limited amount of time?"
Re:Let's all give our real money to scammers! (Score:4, Insightful)
"Here is 50 bucks. This is legal tender anywhere. Could you rig it for me that I can get a token that is only redeemable in here and only for a limited amount of time?"
Yeah, actually. My sister-in-law loves to read. We have some overlapping tastes in genres, but I really don't know what particular book to get her for Christmas. What if she has already read it? Or somone else gives her the same title? Careful interogation about her current reading status might help, but that seems kind of lame in itself - basically "tell me what book you want for Christmas".
So I give her an Indigo-Chapters gift card (specifically not an Amazon gift card), certain that she will buy a book that she wants to read, but does not have yet. It will still be from me, and hopefully she enjoys it.
I'd rather someone give me a gift card specific to one of my interests that I can narrow down myself, than give me something they chose because they know I like cars, audio, etc, but in the end I is something I really have no use for. Like the stereotypical Christmas sweater is to clothing.
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I have a more pragmatic approach to gift giving. Ask me what I want and then buy it. I'll ask you what you want and then buy it. We exchange gifts, we are both happy because it's exactly what we always wanted.
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I have a more pragmatic approach to gift giving. Ask me what I want and then buy it. I'll ask you what you want and then buy it. We exchange gifts, we are both happy because it's exactly what we always wanted.
Begs the question why bother exchanging gifts at all then if the outcome is prearranged? "Once or twice a year we each charge a purchase to each others bank account/credit card." Happy Birthday and Merry Christmas!
I remain unconvinced that is a better show of caring than the chain encumbered token (unless the person recieving your gift can't fix thier car or pay the rent or something, I suppose. There is always that).
At least I can give my sister-in-law a gift card for the local gardening store ins
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Okay, I can kinda see the personal touch angle if you're buying a gift card to a sufficiently narrowly-focused merchant that they are actually interested in.
But frankly, cash with even a brief personal note proving you put the thought into it - "I figured there's probably a book you've been wanting..." - is going to be superior in every way. Unless they're so compulsively frugal that they have trouble spending gift money to indulge themselves (I've been there), in which case "It's not possible to spend thi
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Money works well also and it's not restricted to an interest.
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I have no problem gifting money. The Chinese have the right idea there. "I wish you prosperity, and here's a small bit of it" is the most capitalist thing you could gift someone with, don't you think?
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Because it feels a bit pointless. Hey, for your birthday I'm handing you $50. Hey, for my birthday you handed me $50. Why the fuck did we bother? By doing a gift card, there's minimum veneer that we thought about what the other might like.
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Let's all trade our real money for some digital bits and give it to scammers!
Any money not in your wallet or under your mattress is nothing but digital bits in the ether of the banking industry's computers.
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Yes. There's a notable part of the GPs sentence that you are studiously ignoring, however.
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Nope. A scammer is someone who misleads you for their benefit. Banks are quite upfront about what they do with the money that you put in your account, and what they do to protect you from a run on the banks. So, they are not scammers.
It is true that there are far better things you can do with your money than leave it sitting around in a bank account. That's why wise investors keep only a small percentage of their wealth in such accounts. They refer to it as "liquid assets" because of how easy the money
Re: Let's all give our real money to scammers! (Score:2)
The part you miss is the more transparency there is, the less the word "scammer" is accurate. There is far more transparency in banking, their regulations, and what they do with your money than there is in unregulated investment schemes. I know my bank is doing that with my money. So why is it a scam?
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No one gives money to scammers. The whole point of a scam is that the people handing over the money consider the transaction / person legitimate.
Could this get any more . . . (Score:2)
hilarious? My sides hurt from laughing so much.
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Still waiting for them to make a surprised Pikachu face when they learn that they won't get their money back.
Re: Could this get any more . . . (Score:2)
It's lonely.
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Same here. But I think they are not done yet. I think this whole system works on the "Bigger Joke Theory"!
I think the "Bigger Fool Theory" has been mistaken all along and the "fool" in there is actually a "joker"!
Wow (Score:2)
The judge, Martin Glenn, found that Celsius's terms of use ... meant "the cryptocurrency assets became Celsius's property."
Pwned and boned at the same time. [*golf clap*]
Time to actually read those Terms of Use/Service, especially when your money is at stake -- lest it become their money.
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I predict a run on all major cryptocurrencies soon...
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Oh boy, hope I have enough popcorn at home when this happens!
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Oh boy, hope I have enough popcorn at home when this happens!
Maybe there's not enough popcorn for everyone?
We might have just started a run on popcorn.
high yield != no risk (Score:5, Informative)
One critical information that doesn't seem to be highlighted in the in the summary is that the depositors agreed to allow celsius to invest the crypto on their behalf in exchange for a high yield interest rate. This promise was contingent upon the solvency of celsius.
Always read the fine print.
High yield != no risk.
This scenario isn't unique to crypto.
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The problem is all interest bearing accounts should not really be considered deposits either. There is real risk involved and interest bearing accounts ought to be considered a special type of investment. It is only government protection that allows banks to run de facto hedge funds with your government guaranteed "deposits".
Privatize the profits, socialize the risk. Is there a better example of that out there? Do FDIC deposit insurance rates come anywhere close to covering the systemic risk in the "depos
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500M? (Score:5, Interesting)
8% of the world's population doesn't have a Celsius account. 500M? Really?
Re:500M? (Score:5, Interesting)
Too Big To Fail? (Score:2)
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It's Editor David being inaccurate, to put it mildly.
Judges ruling makes no sense (Score:2)
Almost seems like someone was bribed
they are not banks with laws the cover accounts th (Score:2)
they are not banks with laws the cover accounts that is why crypto let's launder money as it's not an bank so that law does not cover us
Re:Judges ruling makes no sense (Score:5, Insightful)
These scammers are not covered by banking regulation at all. In fact what they offer you is unregulated commodity trading. Hence you have not "put in" anything. You basically bought an option on something with fictional value instead. Perfectly fine on the financial side, although these financial instruments do normally not get sold to non-experts. I believe at least in some banking systems, it is even illegal to sell them to non-experts (because these are not equipped to understand what they are actually buying), but that is a limitation that applies to banks and regulated financial institutions. With DeFi, you lose any and all protection. Which is kind of what the DeFi fanatics wanted. Oh and look, they cannot competently handle their money when the protections are gone. No surprise.
Keys (Score:5, Insightful)
Say it out loud. Then keep repeating it until it sinks in.
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NOT YOUR KEYS, NOT YOUR COIN.
Say it out loud. Then keep repeating it until it sinks in.
With the complete disconnect from reality that the average crapcoin "investor" routinely demonstrates, they will need several lifetimes until that sinks in....
Why would they? (Score:2)
They own fuck all, why their accounts of all things?
They got exactly wanted (Score:2)
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Yep. Just another instance of "Be careful what you wish for.". Pretty good one either. Also demonstrates nicely that simple models of reality have gross inaccuracies and these can and often do kill all predictions made using that model.
The wallet owns it (Score:2)
oh no! (Score:2)
Oh no! "I centralized my de-centralized currency and now it's all gone"
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Yep.
Crypto-"investor": "All my Apes! Gone!"
Sane person: "No, there is one left..."
With apologies to all real apes.
How is this news? (Score:2)
I mean this has been clear for like half a decade. Have these people been completely ignorant as to what they were doing with what was formerly their money?
All exchanges (Score:3)
1) account holders lose their balance
2)Account holder lose their balance when the buyer realizes taking the balances is more profitable than the business itself.
3) Account holders lose their balance when the government decides youâve committed wrong thought.
If you own crypto, you have to own your wallet and have the key hidden/encrypted. Also, nowadays, sanctions are making some crypto funds 'dirty' meaning you'll never be able to convert them to fiat at market rates. So, you need a ZNK proof crypto for value storage, not a mixer crypto.
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Re: All exchanges (Score:2)
It walks like a duck and quacks like a duck. (Score:2)
But an obscure paragraph in the wall-of-text terms of service lets it bite like an aligator.
Re:It walks like a duck and quacks like a duck. (Score:5, Insightful)
YOUR KEYS, STILL NOT YOUR COIN. (Score:3)
https://cointelegraph.com/news... [cointelegraph.com]
Other community members echoed the sentiment and highlighted that if it could happen to Dashjr, there would be âoeno nopeâ for their grandma. A Twitter user also brought mass adoption to the conversation. They believe that if a top Bitcoin developer cannot keep his wallet secure, mass adoption is a âoepipe dream.â
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I trust myself to manage my own BTC keys far more than an exchange. At least I have control of if I screw up or not, but with an exchange, there is nothing I can really do to protect myself. Until the holdings are moved or spent, all I basically have with an exchange is an IOU.
For example, if I am hodling stuff, having an offline wallet is my best best, where the private key is split among m of n shares, in multiple locations, and so on. That way, it doesn't matter how compromised my local stuff is, the
tell me again how they don't own their accounts (Score:2)
They Don't Own Their Accounts
It was already funny when withdrawals were halted.
They. Ahahaa. Don't. Hehheh. Own. Pffffteetee. Their. Bffffffffffft. Accounts! AHAHAA HAA HA HA HAHAHAHA!!!!!
finally 2023 year ransomware died (Score:2)
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And Western Union breathed a sigh of relief now that their core business comes back home.
Accounts (Score:3)
play stupid games (Score:2)
win stupid prizes.
Leonine Contract (Score:4, Interesting)
This sounds like fraud to me. But at least it sounds like a leonine contract.
A contract cannot favor one party completely without giving any recourse to another.
This judge seems to be missing a screw.
"Psst... Buddy. Want to keep your money safe?" (Score:3)
I know it's a back alley, and I'm wearing sunglasses and a trenchcoat at night, but I'll look after your money. It's still yours - I'll just hold it temporarily.
Re:Should it be 500K? (Score:4, Funny)
Sorry, but should it be 500K? 500M would be 500.000.000. Or is that the name of some company? (I couldn't find a reference to it in the link provided.)
Yup. From TFA:
More than half a million people who deposited money with collapsed crypto lender Celsius Network ...
[ Maybe the editors got confused because the Celsius user count is in metric. :-) ]
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But that's kinda the whole point, isn't it? These firms, and cryptocurrency in general, is founded on a whole bunch of inflated, misunderstood, and contradictory figures. So screwing up the headline is just par for the course, eh?
Re:The summary is garbage (Score:5, Informative)
I will bring up the FDIC because you're just ignorant. No depositor has ever lost a single penny on FDIC insured funds FDIC has managed even 140 bank failures in a year, one every two business days.
SPIC arranges transfer of owned stocks to another brokerage; SPIC has managed 291 failures
Your cryptocoin on the other hand, is just uninsured gambling todkens.
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Here have a link to someone with the time to educate your stupid ass [fdic.gov] OFC there are exclusions.
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Too good to be true promises like the FDIC's are the hallmark of scams.
That is plain silly. FDIC is fully backed by legislation that provides savers with a constitutionally protected property right to be reimbursed. If it runs out of money the taxpayers are on the hook.
Re:The summary is garbage (Score:5, Insightful)
"BTC likely will in the million dollar range per unit, while dollars have deflated to at least half their 2023 value."
Explain how the value of a bitcoin measured in dollars can increase that much while dollars only lose half their current value? You seem to assuming bitcoin's value will increase dramatically against every currency in the world. Is there any reason that would happen?
"...as the 1930s Germans found out."
Germany had deflation in the 1930's just like everyone else. They had hyper-inflation for one year in 1923 in the aftermath of world war I, the war reparations they were required to pay and the seizure of its steel industry by France in order to collect those reparations. Its a crappy example.
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It's a great example (minus the complete ignorance of when the Weimar Republic existed). Zimbabwe is also another great example.
If a country mortgages itself to pay for a war, gets its working population slaughtered, its infrastructure destroyed, what's left of its industry forfeit, and is then saddled with a war debt that is unpayable, people are *totally* going to be falling over themselves to trade useful things for your digital token.
All the examples of hyperinflation people like to use are from countri
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the funniest part of that comment is when they say that BTC is the perfect currency because each token is proof of energy expenditure.
Um. Sure. So what? I have proof I finished a marathon many years ago. Nobody finds it valuable that I can prove I burned some calories 20 years ago.
Money is valuable when people agree to its value and enforce it’s value. The USD is valua
Re:The summary is garbage (Score:5, Insightful)
No, it doesn't. If your stock brokerage goes bankrupt the same thing can happen to your assets held there. Same thing with your bank.
Actually, it is. I get that you have no clue what regulation does, but here is a hint: Regulation makes that bankruptcy unlikely without major criminal behavior on the side of the brokerage and very unlikely without major criminal activity on the side of the bank. In addition, regulation makes it pretty unlikely that non-minor criminal behavior will remain undetected. Caveat: One of the things I do is audits in regulated industries, so I have a bit of a clue what I am talking about.
The result is that crapcoin institutions fall left and right. When was the last time a major bank or brokerage collapsed? Right. I do get that you do not understand probabilities and risk management either, but in the real world (as opposed to your fantasy) these matter a lot.
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Interesting. You can still lose money when a brokerage goes bankrupt due to criminal activity, like that money not being held separately, but this is exactly the type of things that internal and external audit and the regulator would regularly check and make sure is not easy to do.
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Only for margin accounts. Other accounts are fully backed by SCIP(?). Margin accounts still have protection after the debt is paid.
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Don't believe me? Live in Europe?
Yes and yes -- I live in Britain, to be precise. I have more than one bank account with deposited funds. To quote from one of the banks about protecting my deposited funds --
"What deposits are protected under the Financial Services Compensation Scheme (FSCS)?
Your eligible deposits with (MyBank) Plc are protected up to a total of UKP 85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme.
There are banks and financial operations which
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Britain is part of Europe? That's news to me. I seem to recall a substantial "screw you guys, I'm outta here" from Britain 'round about 2016.
(I jest, but Britain's due at least that much.)
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Yeah, but it takes a while to paddle an island away from a whole continent. They're still working on it.
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and the other is a deeply corrupt organisation.
Which moron modded this post insightful?
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Depends (Score:3)
Well, first thing I'd be careful about claiming something for all of Europe. I'm sure that banking is treated very differently in Switzerland than the UK, for example.
But in the USA, as long as it is a depositor account - savings or checking, not an investment account, then you remain a depositor and are covered by all sorts of laws and regulations, including the FDIC - Federal Depositor Insurance Company, which is a federal government controlled company that guarantees bank accounts up to a high limit for
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Not only are financial deposits protected by the EU, its citizens are protected from such scams (though the EU wouldn't have much leverage over a bankrupt US company).
But onerous small print has no legal standing in the EU. This is still true for Britain though the Selfservatives are planning to change that.
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"500M crypto investors" means "over half a million people" now? That's a factor thousand off, dear not-very-EditorDavid.
I seem to recall that in a lot of European contexts, "M" is used for a thousand. Case in point, CPM means "cost per mille (thousand)"; mille is the French word for a thousand.
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Someone's asking for a free pentest and DDoS stress test?