How did Wall Street survive the cryptocurrency crash?

Goldman Sachs spokeswoman Mary Ethridge said that only a small subset of Goldman clients are eligible to purchase crypto-related investments through the bank. Clients had to go through a “live training” session and certify that they had received warnings from Goldman about the riskiness of the assets. Only then were they allowed to put the money into “third party money” that the bank had checked first.

Morgan Stanley clients were unable to put more than 2.5 percent of their total net worth into such investments, and investors could invest in just two crypto funds — including the Galaxy Bitcoin Fund — managed by outside managers with traditional banking backgrounds.

However, these managers may not have survived the cryptocurrency crash. Mike Novogratz, CEO of Galaxy Digital and a former Goldman investor and banker, Tell New York magazine last month that he had taken a lot of risks. Galaxy Digital Asset Management’s total assets under management, which peaked at nearly $3.5 billion in November, fell to about $2 billion by the end of May, according to the British newspaper The Guardian. to a recent reveal by the company. It was Galaxy Luna is not sold in bulk Three months before its collapse, Mr. Novogratz was in even worse shape.

But while Mr. Novogratz, a billionaire, and wealthy bank clients could easily take their losses or be bailed out by strict regulations, retail investors had no such guarantees.

Jacob Willett, a 40-year-old man in Mesa, Arizona. Working as a DoorDash delivery driver, he stored his entire savings in an account with Celsius promising high returns. Mr. Willett said the stored value at its peak was $120,000.

Plan to use the money to buy a house. When cryptocurrency prices began to plummet, Willett sought reassurances from Celsius executives that his money was safe. But all he found online were dodgy answers from company executives as the platform struggled, ultimately freezing more than $8 billion in deposits.

Celsius representatives did not respond to requests for comment.

“I trusted these people,” Mr. Willett said. “I just don’t see how illegal what they did.”