As almost always, Matt Levine and I agree very much on this. I mean, my instinct is just to ban the sale of dumb investments to strictly defined non-professionals, but this approach would be a close second.
I also agree with Matt Levine’s suggestion as an option, but it needs the added elaboration that attending at the local SEC office involves a 2 hour wait, and the attending official is extremely surly.
Nearly 2/3 of people borrowed money to get into crypto and are now underwater. The people pushing these coins and suckering people in should be jailed.
Scuzz
3287
I agree scammers should be prosecuted, but people who borrowed money to get into crypto are idiots. Never invest in a get rich quick item unless you can afford to lose money.
I dunno, man. The information on why these are bad investments is out there. If people still borrow money to buy these shitcoins, it’s kind of on them.
It has to be said: the operators of fraudulent schemes are criminals, and their marks are victims.
A fool and his money are soon parted
Fool me once, shame on — shame on you. Fool me — you can’t get fooled again.
I love how the article ends with “Borrowing money to buy cryptocurrencies could be a good decision in the long run. Only time will tell.”
The top 2 methods of borrowing were listed as Credit Card and Overdraft. Yeah sounds like some smart decisions there.
ShivaX
3293
As long as you’re able to declare bankruptcy borrowing for risky investments is great.
I shook my head also. It is one thing to borrow money to invest/speculate with Interactive brokers margin account of 3-5% or HELOC at similar interest rate. But at 18% for credit cards it is insane.
Tim_N
3295
60% seems like an absurdly high number. What I imagine is happening is that the people who used credit cards for convenience is technically using a ‘credit facility’, but is paying off the credit card before any interest actually accrues.
But you could make that in one day in crypto! /s
You are probably right. Although it is actually a little nuts you can buy crypto with credit cards.
I’d think the chargebacks would be worse than porn.
No Visa, I didn’t buy DodgeCoin, or ApeCoin, those guys are scam artists.
rei
3297
LOL you live in a fantasy world. Most people don’t pay their credit card in full with each balance statement. How else do you think you get all those wonderful reward program bonuses? Majority of the middle class and poor subsidizing the wealthy and those with good, stable income.
Tim_N
3299
I guess I was, fantasy worlds sure are nice to live in! Turns out there is yet another way the poor is getting churned through the crony capitalist meat grinder.
Googling backs your post up:
With the 35% of people who said they buy crypto with their credit card, if we assume 44% of them pay it off before any interest accrues, then that would mean roughly 45-50% of people buying crypto are using borrowed money that accrues interest. That is terrible!
JoshL
3300
Thanks for that. Molly White is the hero we need but don’t deserve who doesn’t wear a cape or however that saying goes.
Aceris
3301
IT’s entirely possible they’re accounting anything going through visa/mastercard’s payment systems as credit card debt. A lot of consumer investment transactions are on debit cards now.
wavey
3302
The original report from last year did specify credit cards as one of the credit sources people were using.
Overall, more than two thirds (64%) of those who have invested in cryptos, used one or more credit facilities to do so.
I must admit, that didn’t reassure me that they were familiar with how numbers work (64% is more than 2/3?!), but they do split out the credit facilities to:
| Credit Facility |
Credit card |
Overdraft |
Personal loan |
Secured loan |
Payday loan |
Re-mortgage |
| Percentage |
35.5% |
19.3% |
14.6% |
9% |
7.6% |
3.3% |
Plus, it was a loans company who produced the report, so they may have their own agenda here.
Aceris
3303
Ah right thanks, looks like i was wrong. I just found the number so bad as to be unbelievable. It is quite terrifying - and really underlines the extent to which this is exploiting vulnerable people.
