Pulling your crypto funds from a collapsed exchange platform. If you are among the consumers who are spending lots of money on cryptocurrency investment, then this will really be a great deal for you.
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A visual representation of the digital Cryptocurrency, Bitcoin on October 23, 2017 in London, England.
Imagine releasing lots of funds and then not getting them back or even a portion of them. This specific scenario is experienced by users of Celsius and Voyager Digital; crypto lending and trading firms.
These two blockchain companies filed for bankruptcy this July. Because of this, their consumers' crypto assets are trapped within their platforms.
Celsius and Voyager Digital also froze their clients' accounts after withdrawal activities suddenly spiked, leading to liquidity issues.
Why Pulling Crypto Funds From Collapsed Exchange Platforms?
According to CNBC's latest report, experts claimed that blockchain assets are no longer owned by clients if an exchange platform decided to file a bankruptcy.
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An illustration picture taken in London on May 8, 2022, shows gold plated souvenir cryptocurrency Tether (USDT), Bitcoin and Etherium coins arranged beside a screen displaying a trading chart.
Also Read: Crypto Energy Use and Emissions Tracking Soon? Regulators Want to Focus on Consumption
"Users may be surprised to learn that, in a bankruptcy scenario, the crypto and funds held in their accounts may not be considered their own property," said Daniel Saval, a Kobre & Kim lawyer.
He added that blockchain companies handling digital coins tend to mix customers' cryptocurrencies in just one massive wallet or account.
Because of this, exchange platforms commonly make mistakes when they are trying to return the digital coins of their clients.
Aside from this issue, blockchain researchers also believe that the lack of governing laws reduces the chance of fund recoveries when exchange platforms file bankruptcies.
What To Do When Crypto Exchange Platform Fails?
Blockchain experts provided suggestions that can help you win back your crypto funds when your exchange platform suddenly fails.
One of these takes advantage of the so-called "self-custody wallets." These digital coin storage will allow you to transfer your crypto assets from the failing exchange platform.
But, this is still a risky method. If you will rely on a self-custody crypto wallet, then it is important to save your private key.
If ever you lose your private key (password), there's no chance that you will be able to regain the cryptocurrencies on your self-custody crypto wallet.
Knowing how to protect your digital coins is quite essential, especially since experts claimed that cryptocurrencies will soon rise again.
NextAdvisor reported that this will happen if Bitcoin's price can stabilize before July or August ends. If you want to see further details about the speculated crypto bounce back, you can visit this link.
Previously, Russia's Central Bank crypto ban happened, preventing blockchain mining and transactions.
Meanwhile, the Celsius crypto lending platform was compared to the Ponzi scheme.
For more news updates about cryptocurrencies and other related business tech topics, always keep your tabs open here at TechTimes.
Related Article: Celsius Network Had Range of Internal Failures Leading Up to its Liquidity Issues, Says Former Employee
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Written by: Griffin Davis
