In the gloom of an 18th-century drawing room at the private rehab clinic Castle Craig, near Peebles in the Scottish Borders, Roy, a 29-year-old victim of the global cryptocurrency crash, tells me his story. It is a dazzling summer’s day, but here the mood is sombre. Roy shifts uncomfortably in his chair as he begins.
It all started in February 2021, with a radio advert for Dogecoin, a cryptocurrency promoted by Elon Musk, the founder of Tesla. Intrigued, Roy started Googling, eventually using his credit card to make an initial investment of €2,500 (£2,200) in a range of cryptocurrencies. The value of Roy’s portfolio climbed to €8,000, then €100,000, then €525,000. Roy had entered the market during an adrenalised bull run, meaning an extended period of price growth. A combination of Covid stimulus packages, low interest rates and an unprecedented level of enthusiasm for cryptocurrency among furloughed workers meant the bull was careering out of sight.
Roy started spending all his time watching YouTube videos and speaking to other cryptocurrency enthusiasts in private groups on the messaging app Telegram. He had been treated for cocaine and alcohol addiction twice, but by 2021 he was sober and working as an addiction counsellor, although he was on sick leave as a result of panic attacks brought on by childhood trauma. He soon relapsed. By day, he checked his cryptocurrency wallets every 10 seconds; by night, he set alarms to go off on the hour. He began fantasising about a life free of financial constraints, in which he would never have to work. “I thought I was on top of the world,” Roy says. “Nobody could tell me anything. Money would fix every single problem I faced from now on.”
Then the cryptocurrency market crashed. The price of bitcoin fell from £42,000 in May 2021 to £23,000 by the end of June. It rallied to an all-time high of £48,000 in November, before diving to £26,000 at the end of January. Since then, it has been in near-continuous freefall. At the time of writing, bitcoin is hovering at £17,000. “It felt like I had lost my life,” says Roy. “Because I had invested everything in crypto. I had built every dream I had on there. So, when it came crashing down, my whole life came crashing down.”
Desperate, Roy made a string of bad bets. The value of his portfolio dwindled to €20,000, then €3,000. “It got so out of control because I saw all my chances to live a better life fading away,” he says. “So I became really desperate and eventually just completely isolated. I didn’t want to see anybody, because I thought I was a failure.”
Most mornings, he would wake up shaking from alcohol withdrawal, order booze online and spend the day drinking and taking drugs. He developed stomach ulcers. “You can’t explain the pain,” he says. “I would drink and puke and drink and puke and drink and hope to keep it in, so the pain would go away. I felt like dying.”
In May, jobless and broke, Roy checked into Castle Craig, one of the only centres in the world that treats cryptocurrency addiction. (He lost his job when he relapsed; his rehab fees are covered by medical insurance.) His cryptocurrency portfolio is worth about €300. Now, amid the incongruous grandeur of a Scottish stately home, he is attempting to rebuild his life – and quieten the tormenting thought that he should have pulled out his money when he had the chance.
“It’s heartbreaking,” Roy says, softly. “I hate myself for the fact that I didn’t take it out.”
They gather on Telegram to let out howls of grief and short, sharp shrieks of pain. “Eeeeeeee!”yowls a young woman. “Waahahahah,” roars a man in a deep baritone. A third person wails like a baby. These are victims of the cryptocurrency bloodbath, 3,315 of whom have assembled in a “Bear Market Screaming Therapy Group” group to vent their anguish. “I had a few people lamenting and crying,” says the group’s founder, a 30-year-old cryptocurrency investor who gives only his first name, Giulio. “I decided not to ban them. I felt bad. They weren’t even able to scream any more. They were just sobbing.”
The cryptocurrency industry is in roiling waters. Scarcely a day seems to pass without a wave crashing across the sector. “The rollercoaster has turned and taken crypto holders on a downward spiral,” says Susannah Streeter, an analyst at Hargreaves Lansdown. “Many people have been caused serious financial pain.”
Last month, major coins including bitcoin and ethereum dropped by more than one-third in just a week. While bitcoin has tumbled significantly on several occasions, this bear run – meaning a period of declining prices – feels different. The industry is larger and more interconnected than ever, with retail and institutional investors jostling for space in what was, until last year, a $3tn market. (The crash has wiped $2tn off the market’s value.)
The carnage prompted further sell-offs. This month, the cryptocurrency lending platform Celsius Network halted withdrawals for its 1.7 million customers, citing “extreme market conditions”. A day later, Coinbase, one of the largest cryptocurrency exchanges, announced that it was sacking 18% of its workforce. At the end of June, the hedge fund Three Arrows Capital, which was heavily leveraged in cryptocurrency and related businesses, went into liquidation.
Everywhere is panic and turmoil – and things look likely to get worse. The casualties range from ordinary retail investors to multimillionaire “whales” and celebrities – in May, the British rapper KSI tweeted that he had lost almost $3m in the terra/luna crash. There have been at least two reported suicides, in the UK and Taiwan; on the Reddit community for terra/luna investors, users share details of suicide hotlines.
Advocates argue that this is but a cryptocurrency winter, as seen in 2013 and 2018. Prices will rebound; spring will turn to summer; the bear becomes the bull. They lampoon so-called “paper-hands” investors, meaning those who abscond at the first sign of trouble, and urge each other to Hodl (“hold on for dear life”) and “buy the dip” (purchase coins when prices are low). Others are less certain. Will the frost ever thaw?
There are eight stages of crypto-crash grief.
Shock. “I couldn’t eat or sleep for two nights,” says Alla Driksne, a 34-year-old chef from London. “I got sick from the stress.” She has lost her life savings – a six-figure sum – in the Celsius freeze.
Denial. “I always thought the next project would bring me back up again and I’d cash out before it crashed,” says Roy. “In the next cycle, I’m going to try. In the next cycle, I’m going to do it again.” A part of him still believes this is possible.
Anger. Alex Koh, a 41-year-old engineer and personal finance YouTuber from Glasgow, directs his towards Do Kwon, the South Korean entrepreneur who founded terra/luna. Koh says he lost enough to buy a four-bedroom house in London. Kwon has been accused of fraud by five investors based in South Korea; he is being investigated there by a financial crimes unit and in the US by the Securities and Exchange Commission.
Bargaining. Vahid, a 31-year-old from London, has used Twitter to plead for his money with Alex Mashinsky, the founder of Celsius. Vahid’s life savings, more than £50,000 in cryptocurrency, is locked in his Celsius account. Vahid had planned to use the money to start a business or buy a house. For support, he spends his time on conference calls with other Celsius victims; I listen in to one. “I know anything short of getting your native token [initial investment] back is unacceptable,” says one investor, with desperation in his voice. “But would you rather get back 10%, or 20%, or 34%, you know? Now, I’m hoping it’s not a complete loss.”
Depression. “I thought I’d be able to retire early,” says Koh. “But it’s all gone down the drain. I’ve never cried so much in my life.”
Acceptance and hope. “I worked my ass off doing 16-hour days for six years to earn this money,” says Driksne. “This is hard-earned money. That’s what hurts the most. I lost six years of hard work. But I am trying to stay positive. I’ll make it back again.”
Shame. Vahid hasn’t told anyone he has lost his life savings. “I don’t want people turning around to me, saying: you should have taken your money out last year,” he says. I ask him if he is embarrassed. “Of course,” he responds.
Processing. “I hope that I can show that I am willing to learn and accept my mistakes,” says Koh. “If I rebound from this, perhaps I can be an inspiration to people elsewhere around the world – or my kids, at least.”
The industry’s enthusiasts and sceptics agree on one thing: they saw this coming. Perhaps they didn’t predict the precise contours of the crash, or the fact that so many seemingly reputable companies would flame out, but there was a sense that the cryptocurrency bull would run out of road. The sector was too hot, too loaded with bad-faith actors, scammers, credulous investors and amateurs feigning expertise in Telegram groups, YouTube videos and Twitter threads. When internet jokes such as PooCoin and Dogecoin surged in popularity, it ought to have been apparent that a market…