Voyager digital. Oh holy smokers folks. This ain't no dang joker's voyager digitals digitals ticker symbol v. Y gvf has gone absolutely parabolic uh.

But yeah if nothing 12 months ago. We're good everything's upside down wow everything's upset wow everything is upside that's incredible because i'm looking at this stock. And i see a 10x written all over the stock over the coming years last year. This tiny company that nobody had really heard of suddenly exploded because for some miraculous reason.

A whole bunch of the biggest youtubers in the finance space started talking about it at exactly the same time just as the company went public. Naturally you would probably be asking yourself the obvious question as to why it was that huge investing channels like meet kevin or jeremy financial education. Suddenly got so massively excited by a random crypto. Small cap stock that traded over the counter because only a few months later voyage digital has just gone bankrupt they have filed for bankruptcy protection in the last few hours.

Joining the fast growing scrap heap of dead crypto companies. Why would you not have your money in cryptocurrency. If you can get you know eight percent or six percent or whatever. It is as a yield just having your money sitting around essentially in savings usually with with some yield comes.

Risk. What's the downside. I mean i mean can't people like you know what if the people that this money gets lent out to or whatever lose it or there's some kind of failure. I mean isn't there some risk definitely is risk look.

I think everything you do you know when there's yield there's risk. But in the token of us. And that's why i say you got to look at who you're working with on this a lot so you're minimizing the risk. Because of who we're working with i think that's a really important aspect because sometimes you go to the interest bearing components.

Some of the you know the players in that space you not really know where the coins are going and a lot of people are going to lose a lot of money investors who are strongly encouraged to buy the stock of a company that had never heard of have now lost. Everything voya digital stock is trading in 27 cents. Roughly. As i'm recording this video.

Which is 99 down from november. And all the crypto investors who used voyager to buy their crypto are finding out the hard way that all the claims of your money. And assets. Being protected are unfortunately just because here is the thing voyager was one of the very many crypto companies offering really cool features like staking you go and put your money into the product.

And you'll get returns of up to 12 per year. What is not to like this is a really popular feature with the crypto bros. Which is why so many of the big crypto exchanges offer this service. You see savings accounts these days.

Don't pay you any interest. And there is no other asset on the planet that will pay you a guaranteed. 12 return per year with no risk that is way above. What you can get from the stock market on average over the long term and the reason that these brokerages could pay 12 per year.

Is because it's crypto bro. It's magic. The big problem with magic is that it's fake and behind every magic trick. There is the dispiriting reality of what actually goes on behind the scenes.

And there are unfortunately only three ways in which voyager and all the other scumbag crypto exchanges can possibly offer you returns of 12 or 15 or maybe 666 per year. The three ways are one a ponzi scheme. This is where you pay old investors using cash that you've just taken in from new investors propelling. The scheme.

A good old fashioned pyramid scheme. If you like option number two you pray that the high bubble of crypto tokens keeps on going forever. So the value of the useless doctor tokens that you're shilling goes up faster than the rate at which you have to pay people out or option number three. You take the money that people have given you and you lend it out to some shady people who will take huge risks with it with that money and those people will maybe if you're lucky pay you back a very high rate of return in exchange for taking on that huge risk.

And that is it there is unfortunately no way to go and earn huge returns on your investment without taking on an exceptionally high risk i know i know it sounds absolutely crazy. But hey let's spit. Some facts it turns out that voyager has taken option number three and they've gone and lent out their customers money to a hedge fund and that hedge fund. I'm using the term loosely here chose option number two for themselves.

They went and put all of their money into crypto. Because hey crypto. Only ever goes up and the moment that crypto did not only go up that hedge fund collapsed. Spectacularly along with all the money that voyager gave them and we've recently seen a whole bunch of these scam crypto companies collapsing one after another we've had terra luna go down.

Then we've had celsius now voyager digital and as these companies are collapsing one after another the young naive investors who chased those huge returns are suddenly realizing that their money is now all gone and even worse. They are also realizing that all the protection that these companies claim you would have in the event of a collapse. Well those protections are worth absolutely nothing too because you see if you had cash sitting with voyager. It was apparently protected by fdic protection.

And that money sat with a metropolitan commercial bank in new york. And here is what that bank had to say about this protection. Metropolitan commercial bank. Maintains.

An omnibus account specifically designated for the benefit of voyager. Customers. The omnibus account holds us dollars. Only it does not hold cryptocurrency or any other asset.

So yeah it probably should have been obvious already but your crypto assets are completely gone and not covered by any protection. Not that the protection helps with the other stuff. Because let's keep reading voyager is responsible for maintaining records to determine the ownership and amount of each of its customers funds on deposit in the omnibus account. Metropolis commercial bank is the new york chartered bank and member of the federal deposit insurance corporation.

That's what fdic stands for voyager customer funds held by metropolitan commercial bank are insured by the fdic up to the maximum amount of coverage per depositor. Under federal law. The standard fdic insurance. Coverage.

Amount is currently 250 000 per. Depositor for each account ownership category. But here is the really critical bit fdic insurance coverage is available only to protect against the failure of metropolitan commercial bank. Fdic insurance.

Does not protect against the failure of voyager. Any act or mission of voyager or its employees or the loss in value of cryptocurrency or other assets. More information about fdic coverage is available on the fdic's website and herein lies. The massive problem.

If voyager digital collapses like it just has done fdic protection is not there to give you your money back you just become one of the very many creditors of a worthless company that has just gone bankrupt and has no money to pay you and if say voyager screwed up for whatever reason. And if say they lent out your money to somebody else. While you thought it was safely sitting in a bank account somewhere or if they did not hold good enough records if they didn't explicitly say. Whose money was in the bank and whose money wasn't because it was lent out then if that is the case you are totally massively screwed and in an age when we all use these new free investing apps.

Like robinhood trading 212. Whatever the problem is that this same issue applies in different guises to all of those platforms as well no matter. How strongly they will tell you the exact opposite. If your broker collapses because they ran out of money because you know offering a completely free investing service doesn't earn very much money.

Without having to figure out alternative ways of earning money and your shares or cash are in some kind of omnibus account or even worse lent out somewhere. Then you might have to find out the hard way that the protections that you think you have in countries like the uk us. And many other countries around the world are not quite as robust or immediate or safe. As you might think and this risk is way higher for crypto exchanges.

Because these are either not regulated at all in many cases or much much more loosely regulated than the investing. Brokerages. That actually have to adhere to some kind of rules and it appears that a large part of this industry. This crypto exchange industry is very happy to engage in ponzi schemes.

Various different kinds of scams or take on excessive ridiculous levels of risk with their customers money. The big problem that we have right now. Is that bitcoin has been hovering around the 20 000. Mark.

For three weeks. And the problem is that this is just above. Where the peak of the run in 2017. Was this is extremely significant because this is the first time in bitcoin's history.

Where the price during the four year cycle. That bitcoin tends to have gets anywhere near to a price that people were buying bitcoin in the previous cycle. I mentioned this exact problem multiple times before when bitcoin was trading at much higher levels on my channel and now we are unfortunately seeing it unfold. The reason.

This is a massive issue is that at the moment. All the crypto including bitcoin is valued based on hype. You might think the hype is justified or maybe not justified at all i'm sure there's different camps in the comments section that are going to go and debate it but it's hard to dispute. The fact that the only reason bitcoin is worth say.

20 000. Is because of a consensus on the hype. Based valuation. There are no fundamentals.

That drive the price over the long term bitcoin doesn't earn a profit pay dividends. There's no way that you can calculate the expected long term value of that you're gonna get by holding. It and bitcoin is not a currency. So there is no market activity.

Consensus on pricing mechanisms either there is no specific logical reason or a mathematical model that can reasonably argue that the price of bitcoin should for example be twenty thousand dollars. Today as opposed to maybe two thousand dollars or say. Two hundred thousand dollars. That is the definition of what a hype based valuation is before all the crypto bros.

Get really upset in the comments section. It is not all that unusual for assets to be priced on hype in fact there are many other assets that do the exact same thing things like classic paintings for example. So crypto is not necessarily unique in that way. It's just a member of this type of asset class.

And here is the existential problem for bitcoin specifically. As we all know all the rest of crypto. Tracks and depends and completely relies on bitcoin. However much they think otherwise so unfortunately they all carry the same problem.

We are now in a situation. Where an asset whose value is based on hype is priced at a value. Which is roughly the same that some investors were buying this asset back in december. 2017.

And this is when all the newspapers were tripping over each other talking about how bitcoin is the next best thing and all the retail investors rushed out to buy some so the issue here is this there are now bitcoin investors who bought back in 2017. Who have made no gains at all this is the first time this has happened since bitcoin was invented and has gone on this 10 year run and at the same time. We have high inflation and a massive squeeze on earnings around the country in the us and around the world we are seeing savings decline at the fastest rate since the financial crash in 2008. So those people may be under double pressure to sell on the one hand.

They have an asset that has gone nowhere in five years and is still trending down and on the other hand they may have financial holes that they need to plug so if the economic situation worsens. There is an increased likelihood that those investors will start selling at an accelerated pace and if that happens then the price of bitcoin will dip. Even more and then more people who bought during the previous cycle will now be in the same situation. Because more and more of them will have bought before in the last four or five years at a price that would be higher than the price.

It is today. If bitcoin was to go below eight or nine thousand dollars. Then all of the people who invested during the current cycle and the vast majority of all the people who invested in the previous cycle will all be net down on their investment. This is really important because this is where the crunch point will happen because sure there will be some hardcore die hard crypto fans.

Who will hold no matter what and post diamond hand memes on social media and stay with bitcoin or whichever crypto. It is that they prefer all the way to the bottom. But there will be far more people who have brains and financial pressures and things like that who will be looking to get out instead. And this can yield a very disastrous self fulfilling prophecy.

We are seeing all the great web. 3. Inventions crumble all around us suddenly people are realizing that an entry in a random database that has a link to a jpeg of a monkey and a funny hat is maybe not worth hundreds of thousands of dollars after all i know it sounds completely bonkers. But hey here we are and suddenly returns that were too good to be true turn out to be too good to be true again completely mind boggling and this mighty downfall is only going to create increased downward pressure on the entire crypto space.

Instead of the upbeat headlines that we were seeing encouraging everyone to buy bitcoin back in 2017. We're going to have the exact opposite and this opposite is much worse than any of the other crypto winters. That we've had before because. This is the first time ever that people who invested in crypto over the long term are finding themselves down on their investment and when the sentiment shifts.

Because it will and the price is collapsing all around you. And there is a broad economic pressure on top of that with inflation earnings savings pressures all of that this could lead to a very very profound revaluation of crypto. If you are a crypto holder be very careful out there the perfect hedge against inflation appears to not provide any hedge at all to anything if you found this video useful please don't forget to smash the like button for the h. Algorithm and feel free to go and have some fun in the comments section with all the crypto bros telling me that i need to do more research and telling me how stupid i am.

Thank you so much for watching. And as always i'll see you guys later you.