A CRYPTO trader claims to have made £3 million in just three weeks after investing in a new meme coin.
The anonymous user is understood to have made the mega profit after ignoring warnings and deciding to spend £208 on Pepecoin tokens.
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After Pepe was released on the Ethereum Blockchain in April, investors have bought large quantities of it.
But experts have warned the fad could end quickly and badly, especially as cryptocurrencies are extremely volatile and can be incredibly risky to invest in.
Crypto is unlike other investment types in that it’s not regulated. This means you have no protection should things go wrong.
Pepecoin has been making a lot of money for people who are not deterred from the warnings.
One trader who goes by the name dimethyltryptamine.eth spent £208 on trillions of tokens three weeks ago.
According to the user, they have already made £3 million from tokens they have sold, reports Coin Desk, while their remaining holdings are worth around £7 million.
This coin was inspired by the meme “Pepe the Frog”, a cartoon created Matt Furie.
However, experts are concerned about the ownership concentration of Pepecoin. Most tokens of the currency are owned by only a few traders.
The price of a stock could drop immediately if a top holder suddenly sells.
One of the biggest concerns for those considering crypto currency is not knowing if you can convert it back into money when necessary.
The fees and charges associated with buying and selling investments can be higher as well.
New proposals from the government may give Brits more protection when investing in cryptocurrency.
Ministers are looking to regulate the cryptocurrency sector to help consumers avoid risks.
Cryptoassets – known as “crypto” – are relatively new, diverse and constantly evolving assets that have a range of potential benefits, as well as risks.
In the year to December 2022, reported losses in crypto scams rose by 72 per cent – resulting in £329million lost, according to Action Fraud
The five risks associated with crypto investment
We have rounded up the five biggest risks to investing in crypto currencies.
- Consumer protectionSome investments that advertise high returns on cryptoassets are not subject to regulations beyond the requirements for anti-money launder.
- Price volatilityThe high volatility of cryptoassets combined with difficulties in valuing them accurately puts the consumer at risk.
- Product complexityConsumers may find it difficult to comprehend the risks of certain products and services that are related to cryptoassets due to their complexity. Cryptoassets cannot be guaranteed to convert back into money. The market’s demand and supply will determine whether a cryptoasset can be converted back into cash.
- Taxes and chargesFees and charges can be higher than the fees for investment products that are regulated.
- Materials for marketingCompanies may exaggerate the number of returns or underestimate the risk involved.