What Happens To My Investment If My Crypto Platform Goes Bust? 

Cryptocurrencies all the rage these days. Yet, consumers may be dismayed to learn about the dangers involving investment in crypto. For example, what happens to my investment if my crypto platform goes bust? Then your crypto investment may be at risk.

Did You Know? 

There are real issues if your crypto platforms go bust. It gets even more complicated when a bankruptcy is involved:

• A number of these crypto platforms have experienced bankruptcy in recent years.
• Some of the bankruptcies were allegedly due to a “run on the bank.” This is where customers engaged in significant withdrawals in a short time span.
• In some cases insider mismanagement, fraud or insider trading which led to the bankruptcy.
• Exchanges often use your investment to pay legal fees and debts in a bankruptcy. This means investors are the last to collect.
• Investors using a decentralized wallets or a decentralized non-custodial wallets alongside custodial wallets have the ability to control their crypto.

Impacts When Crypto Exchanges Go Bankrupt 

Investors with custodial accounts could also find it extremely difficult to get paid. This is because they will be last in line after creditors and attorneys. However, investors using self- or non-custodial wallets won’t be as impacted by the bankruptcy. Obviously, spreading cryptocurrencies among multiple wallets also allows investors to reduce risk. 

The Downside of Self- or Non-Custodial Wallets 

There are drawbacks to managing your crypto yourself:

• People using non-custodial wallets say that it becomes more complicated to use one of the exchanges. It also requires pretty substantial technical proficiency.
• It also requires more work to manage your own wallet.
• You could face a serious financial loss if you lose or forget your password.

The Bottom Line 

There is a risk in putting cryptocurrency investments through an investment platform and/or an exchange. In the event of the platform’s bankruptcy, there’s simply no guarantee of a payback. However, if you are lucky enough to recover your funds, it could take a very long time.

Read More About Cryptocurrencies On MFI-Miami.com.