Home Business News MP calls crypto investing ‘gambling’ as charity warns of increasing calls for support for online trading

MP calls crypto investing ‘gambling’ as charity warns of increasing calls for support for online trading

by LLB Finance Reporter
12th Dec 23 8:15 am

Prior to discovering the world of cryptocurrency trading, Michael which is a pseudonym to ensure anonymity, had forged a relatively stable career as a professional poker player for around eight to nine years.

He’d started playing poker at university, winning the odd £5 in the casino here and there. As his skills for poker grew through uni life, so did the stakes he was putting down – and at the very height of his poker at uni Michael had won roughly £100,000.

Tax deductions: Keep more of your money

“I’d won more money than I’d known what to do with, only to lose half of it soon after” recalls Michael. “I spent half of my last year at university chasing my losses and trying to win it back. At one point I went to student services for support and I showed them my bank statement, and they gave me a leave of absence. I went back to repeat the term, but I just couldn’t properly concentrate on my studies.”

He continued playing poker after university, moving up to a professional level. He was earning a decent living from it for a while – never quite as much as he won at university – but ultimately able to provide for himself.

“When my girlfriend told me she was pregnant, from that day I started controlling my gambling and became a super sensible poker player. I had the incentive to not gamble recklessly as I had to financially support a child for the rest of my life.”

Michael decided to stop playing poker professionally a few years after the birth of his first child and found new work where, after a while, he received a bonus payment that was transferred in Bitcoin. He didn’t have experience with cryptocurrencies up to that point, apart from one friend who had advised him to invest who had increased his investment back in 2016 six-fold. Michael sat on his bonus in Bitcoin and didn’t cash it out for a long time.

In 2020, as the COVID-19 pandemic swept through society, he noticed an article citing how the crypto market had started plummeting.

“What was initially worth £8,000 had halved when I looked at it. I was worried it would drop to zero so I sold it, but then it jumped back up, and I bought it all back thinking I’d try and ride the wave as it increased. I wasn’t that knowledgeable then, but soon after I started to put my income into different coins as it seemed like a good time to invest – it was at a four-year high.”

The nature of cryptocurrency as an unregulated market presented both opportunities and eventually challenges for Michael.

“In investment banks, you don’t see stocks and shares go 4000% in three minutes; they move 5% in two years. It was common for the markets to crash, where people would then panic sell their crypto and then repurchase it for higher amounts. I thought I had figured it out.”

Michael started piling his money into crypto.

“I started buying lots of coins as the market was rebounding. I bought one at $3 which immediately went up to $22. I had theoretically made thousands on it and thought that was that, but within days saw the coin go down to $6.”

That summer, with the crypto market beginning to look bullish again, Michael went on a holiday to Turkey in between lockdowns where he estimates he was sat on a portfolio of $3m.

“I thought if it was worth $3m, I could easily get it to $5m or $10m.” Reflecting back, he admits it was not a smart move to have 99% of his total net worth in something as volatile as crypto.

“One day it nearly halved, then dropped to $1.1m in total, but I kept reading from within the space that it would only go back up again and it wasn’t at its peak. My endorphins were rushing and started to feel similar to gambling; you never have enough money, but this wasn’t real money as I still hadn’t cashed it in.”

In February 2021, Michael found a new way to leverage his cryptocurrencies. He would loan out some of his existing coins for cash, which he would use to reinvest in more cryptocurrencies. This would amplify his portfolio considerably if the market continued to increase, as it was doing so at the time. However, it would leave him highly exposed if it decreased as his loaned coins and his new ones would depreciate rapidly.

“I thought that if there was a crash, it would just go back up again like it always has. In May 2021 there was a huge fall and I still hadn’t cashed out my crypto because I was still wanting and waiting for more. If I had just cashed out the money at that point, I would have been able to pay off my mortgage and more.”

“There was one occasion where I’d invested in a coin that was being relaunched, which was worth just $1 when I bought it. At its peak weeks later, it had increased in value by 2000%. Just a few weeks after that, the same coin was liquidated and all value was wiped off – that’s how quickly you can feel the rug being pulled from you in this type of trading.”

By May 2021, his portfolio began losing value at a rate he’d not witnessed before, but Michael says he “had the mentality of a gambler” and he wanted to recoup what he’d lost. He was starting to chase his losses.

With his earnings dwindling and the market tumbling, Michael’s mental health began to wane like he hadn’t experienced before. He was in a bad place and would regularly wake up at all hours of the night to continue his trading – checking his phone every half hour through the night – all the while also trying to be a husband and father around the house and also be active at work.

It was his mother-in-law’s birthday and all the family went to a weekend resort nearby to celebrate. Michael thought it would be a chance to catch a break from trading and spend time with extended family, and relax a little. “The day before we were meant to leave, my coins came in on a huge position which I felt I had to watch and see to, so I didn’t join my family for the weekend and sent my apologies.”

“That weekend, my brother arrived unannounced to my house and performed an ‘intervention’. He shared how my trading was impacting everyone around me – including my family – and was close to sending me to a hospital for me to get help. He insisted I transfer all my coins to his name to stop it all, which I did that day.”

Shortly after however, with Michael committing to his brother that he would stop trading, he and his brother realised that there was still a lot of value in his coins, with his brother reluctantly converting them back on the basis that Michael sold them immediately.

Michael didn’t, and set about using them to start ‘leverage trading’ – a type of trading that was akin to betting, but on crypto. “If a coin was worth $50 for instance, I could essentially place a bet on whether it would be closer to $51 or $49 by the end of the hour. If I had chosen to, I could’ve bet half a million dollars just on that transaction and nobody would be any the wiser.”

At one stage, having given up hope that the crypto market would have a comeback, Michael decided to ‘short’ his coins (bet against the market). But luck continued to go against him, with the market experiencing a sharp uptick after and Michael was again out of pocket to the tune of hundreds of thousands of dollars more.

Michael’s wellbeing began to take a major tumble once again and he was beginning to accept that this was ruining his life. “This really was rock bottom” says Michael.

It was also having a toll on his home life. Michael credits his wife for the incredible job she had done in shielding the children from it all, but he was increasingly aware that he was not present when at home and there was a risk he could lose those closest to him if he continued.

“That’s when my brother intervened again, arriving at my house, taking my phone and essentially pressed the ‘red button’ there and then and sold around $100,000 in one go.”

His brother drove Michael to go and see his boss. He had been falling behind at work and had avoided attending three meetings with him in recent weeks. He was in a bit of a state at this point but his boss was supportive. “He told me that I would lose everything if I continued down this path and that I needed to stop – he was genuinely concerned for my health. The meeting opened my eyes to it all.”

Michael eventually contacted the National Gambling Helpline and was referred for support. “The best thing to come from the treatment sessions was that they reinstalled into me that I could be okay.

“They told me that I could still have my family, rebuild my life, and accept the money is gone. I told myself it would be better without it, and their words got through to me where they hadn’t before. So a switch went for me, which I wish had happened earlier, but I started to go to Gamblers Anonymous as I didn’t ever want that switch to get turned back on.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]