The Debt Panel: 'I lost my life savings after investing in cryptocurrencies'

The Dubai resident invested his salary and borrowed on credit cards to buy Luna and Terra stablecoins before the market crash

The reader moved his entire investment portfolio from Bitcoin and Ether to Luna and Terra since they were considered more stable digital currencies. Illustration: Nick Donaldson / Getty
Powered by automated translation

I earn a monthly salary of Dh6,000 ($1,633). I invested Dh80,000 of my family’s and my savings in cryptocurrencies after listening to friends who dabbled in trading and watching promotional videos by social media influencers.

Initially, I purchased Bitcoin and Ether. Those investments grew in value quickly last year and I considered quitting my job to pursue cryptocurrency trading full time because I thought there was huge potential to attain financial freedom with digital tokens. It looked like a get-rich-quick scheme to me.

I later moved my entire portfolio into Luna and Terra as they were considered more stable digital currencies.

I invested the majority of my monthly salary and even borrowed on credit cards to put more money into the stable tokens.

After the recent cryptocurrency crash, my digital wallet is now worth just Dh5,000. I’m devastated and am caught in a spiral of high-interest debt.

I have yet to sell my cryptocurrencies. All my life savings have vanished and I am ashamed to tell my family of my debt problem. Please help me find a way out of this financial mess. KL, Dubai

Debt panellist 1: Steve Cronin, founder of

You have made almost every mistake in investing. There are some painful lessons to be learnt but hopefully they will serve you well in the future. Let this be the disaster you needed so you could become good with money.

First, you invested far more than you could afford to in a high-risk asset, which is any kind of cryptocurrency. You shouldn’t put more than 10 per cent of your investments into something that risky.

You put more than 100 per cent through borrowing. You also probably didn’t keep any cash as a buffer in case this happened, such as six months’ worth of expenses in a bank account.

You also involved your family. This reduces your safety net if something goes wrong with your own investing as they can’t help you out so easily. It also gives you responsibility for their money and could ruin your relationship with them. Legally, they entrusted their money to you, knowing you are not a professional investor.

You invested by copying friends and influencers, both usually terrible sources of investment advice. Having little trading experience, you thought good trading years would always be followed by more good years, even though the world was clearly struggling.

You thought a get-rich-quick scheme was positive when in reality, they are always bad over the long term.

In fairness to you, you didn’t buy a lot of altcoins and stuck to the more “sensible” coins. Your undoing was believing that algorithmic stablecoins were safe, despite being completely untested over time and in difficult economic conditions.

You had bad luck with Luna and Terra. If you had popped in Dh10,000, it would have been annoying. But you had stacked your entire financial life on top of that one wobbly brick.

Borrowing on credit cards doesn’t make sense for any investment. A card’s annual interest rate in the UAE is about 40 per cent. In most cases, you can’t make anything close to that in annual returns from investing.

An asset that does offer that is an enormous red flag for riskiness. By leveraging your investment with debt, you greatly increase your losses from even small negative movements. Your assets are now worthless, but your debt remains.

You must take ownership of this situation. You need a plan and you need support. You must tackle the card debt first to stop it from spiralling out of control.

Look for a better-paying job so you can secure a consolidation loan on your card debts. Take on extra work if you can and mobilise any cash or assets you have to pay down the debt. Ask the bank for a payment holiday or debt restructuring.

What happened to the Bitcoin price, is it the end of the crypto boom?

What happened to the Bitcoin price, is it the end of the crypto boom?

Reduce your expenses and see if any friends or family can help you pay down the debt. You could offer them a 2 per cent to 4 per cent interest rate, which is more than they would receive from many banks.

You need to tell your family, as there is no way to get their money back soon. Emotionally and financially, you cannot hold this burden alone. Be honest and transparent as they all need to learn from your mistakes as well. Show them that you have a clear plan to sort this mess out.

Debt panellist 2: R Sivaram, executive vice president and head of retail banking products at Emirates NBD

It is unfortunate that you are facing this difficulty and I empathise with your situation.

Firstly, we hope this experience has taught you an important lesson in managing your personal finances — you must avoid putting all your eggs in one basket, especially when it comes to investments that can be very volatile.

It is prudent to always diversify your investments to ensure you have a mix of safe and “risky” asset classes. Especially for new asset classes such as Bitcoin, one needs to do their due diligence on the pros and cons and never consider investing all their life savings into such assets, even if they seem quite promising to start with.

Since you have a source of income, I would recommend that you approach the bank and request it to restructure your liabilities. You need to return to a more stable financial plan as a priority, keeping in mind your income.

To do this, carry on paying off the credit card debt as fast as possible. Even if you only make the minimum payment on your card, the high interest rate (probably 40 per cent plus per year) will make your debt grow faster than you can pay it off.

You have a considerable amount of debt and I suggest you discuss your current financial situation with your bank and agree on a restructuring plan, including consolidating all your debt into a long-term loan. The bank will most likely help you with several options in terms of settlement or restructuring of your liabilities.

While I do agree that it would be difficult to face your family, it is important that you discuss this with them.

If you have assets in your home country, you could consider selling them to provide you with some immediate relief to your current financial distress. However, your priority should be to retain your income in the UAE to ensure your financial situation is under control again.

Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching

You no doubt will have learnt a valuable lesson. If something feels like a get-rich-quick scheme, be very wary.

Friends and social media influencers are rarely trained or qualified to give investment advice. Always seek advice from a licensed and qualified professional.

You mentioned you have only considered quitting your job. I hope this means you are still working and still have a regular income from that. This income will likely be the source of funds to resolve your debt issue.

It is rarely wise to borrow money to invest. Focus on repaying your debt as soon as possible.

It would be wise to reduce your cost of living as much as possible so you can dedicate as much as you can to paying off your debt.

Why is everything so expensive right now?

Why is everything so expensive right now?

This may be a very difficult time that requires sacrifices, but it is only temporary. And the more money you can dedicate to your debt, the quicker you will pay it off. Once the debt is paid, all your income will be yours to use as you wish.

I would also suggest that you do not sell your digital assets in a panic. At the moment, your loss is only on paper. If you sell, you are solidifying the loss.

The best thing to do is leave the assets as they are and think long term. Hopefully, they will rebound over time and their value will grow again. It may not happen but if you sell your assets now, there is no hope of you gaining again if the market rebounds.

This level of risk is inherent in digital asset investments. My recommendation is never to invest more in this type of risky asset than you are comfortable with losing.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to

Updated: June 15, 2022, 5:00 AM