By Francis Lew, CEO
The cryptocurrency industry has experienced explosive growth in recent years, attracting millions of investors seeking to capitalise on the digital asset revolution.
However, amidst the excitement and odds of a massive upside potential, there are practices within the industry that demand scrutiny, just like in TradFi.
We delve into four practices that investors should be aware of before they choose whom to invest their cryptocurrencies with.
Misallocation of Funds
One of the most alarming practices in the cryptocurrency industry is the misallocation of customer funds.
Companies may use customer funds for purposes other than what was originally intended, such as financing operational expenses, making risky investments, participating in asset liability management (ALM), staking in questionable pools, and in some extreme cases funding executives’ extravagant lifestyles.
These can lead to severe consequences, including the loss of customer assets.
Such practices can also jeopardise the security and stability of the said platform, ultimately harming its users. On a larger scale, such practices and bad actors harm and demean the nascent industry.
At Nodeam, we are dedicated to safeguarding customer funds. Nodeam has, as part of our operating philosophy, made it a point to not stake, lend (perform ALM), or otherwise leverage customers’ digital assets.
Your funds remain secure and untouched within a vault maintained by an independent custodian.
This commitment to responsible digital asset management sets Nodeam apart as a safe haven for investors.
Lack of Transparency
Transparency is the cornerstone of trust in the financial world, but it can often remain elusive in the cryptocurrency industry.
Many companies lack transparency in their operations, making it difficult for customers to track and verify their assets.
Customers may struggle to obtain a clear view of their assets and their transactions.
Such opaqueness can lead to mismanagement and potential asset loss, as customers have no way to hold companies accountable for their actions.
This issue poses a significant challenge to the maturation of the crypto industry.
Nodeam is committed to providing clear and accurate records of your assets and transactions, fostering trust between us and investors.
We have ensured transparency in the flow of digital assets, where clients can view their balances and have access to them anytime.
The cryptocurrency market is volatile, and some companies take on excessively risky trading strategies on behalf of customers without their knowledge or consent.
These strategies can range from highly leveraged positions to speculative trading of customers’ assets.
The potential consequences of such strategies are severe. Customers may suffer significant losses, or their assets could be entirely depleted.
While investing in cryptocurrencies is inherently risky, customers should have control over their risk tolerance, and companies should not engage in high-risk trading without explicit customer permission.
Nodeam prioritises customer security and responsible investment.
We do not engage in speculative trading or unquantified risk taking.
Nodeam publishes content on its website through tutorial videos and product factsheets to educate customers of the risks taken on and will only execute investments requested by them.
Your assets remain secure in the custodian ecosystem, in line with Nodeam’s commitment to prudent practices.
Inaccurate or incomplete record-keeping is a fundamental issue in the cryptocurrency industry.
Without proper documentation and records, it becomes difficult to track and verify account balances and transactions.
Customers may face confusion regarding their assets and account history, and disputes may arise due to the lack of clear records.
Companies that do not prioritise comprehensive record-keeping put their customers at risk of mismanagement, accounting errors, and potential disputes.
This not only undermines the trust and credibility of the company but also contributes to the broader problem of financial mismanagement within the industry.
Nodeam recognises the importance of meticulous record-keeping.
We ensure accurate and complete records, so customers can easily track and verify their wallet balances and transactions.
Nodeam’s dedication to detailed record-keeping empowers customers to have full control and oversight of their assets.
While the cryptocurrency industry holds immense promise and potential for the future of finance, it is essential to remain vigilant and aware of unsavoury practices perpetuated by bad actors.
Misallocation of funds, lack of transparency, risky strategies, and poor record-keeping can jeopardise the security, trust, and stability of the industry.
Nodeam does not lend or stake digital assets, provides transparency in its operations, avoids risky trading strategies, and maintains meticulous records.
We will go so far as to say that we offer a sanctuary for investors who prioritise the safety of their digital assets.
As the crypto industry evolves, Nodeam will continue to shape the landscape, fostering trust and growth within the community.