Cryptocurrency: Stay In? Get Out? How to Decide?

The whims of the cryptocurrency market are exposing some investors in uncomfortable ways. To avoid being caught in a compromising position, investors should follow these three sensible steps.

A humorous photo of an older man holding a beach ball in front of him. His swimsuit is around his ankles.
(Image credit: Getty Images)

Warren Buffett is famous for saying “Only when the tide goes out do you discover who's been swimming naked.” If you invested in cybercoins, the news has not been good lately. Are you wearing your bathing suit? What to do? Is time to take your profits … or cut your losses?

The international investment community was shocked and saddened to learn of the utterly unexpected news that millions of investors worldwide were victims of a pyramid scheme involving cryptocurrency accounts controlled by “founders” in Tbilisi, Republic of Georgia, and Moscow. The SEC charged 11 people in the case in August.

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Stephen P. Harbeck, Securities Investor Protection Corporation
President and CEO (retired), Securities Investor Protection Corporation

Stephen Harbeck served as President and Chief Executive Officer of the Securities Investors Protection Corp., a nonprofit created by Congress to protect customers of failed brokerage firms, from 2003 to 2018. He guided SIPC through the insolvency of Lehman Brothers, the largest bankruptcy in history, the collapse of Bernard Madoff’s brokerage firm, the largest Ponzi Scheme in history, and other major insolvencies. Harbeck retired as President and CEO of SIPC in 2019.  Since then he has acted as a consultant to the Shanghai Financial Court, and Shanghai Jiao Tong University, and is currently a consultant to the Japan Investor Protection Fund. SIPC, as a matter of policy, disclaims responsibility for any private publication by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of SIPC or the author's colleagues on the staff of SIPC.