‘How can I unlock my crypto wallet and access my funds?’

However, I now face a high credit card bill each month due to interest and penalties for late and missed payments.

Will any credit card protection programs apply? Also, would I have earned any rewards for card transactions in my crypto wallet?

I tried sending many emails to the trading platform’s customer support team. However, there is no response.

The value of my crypto assets has also fallen due to extreme market fluctuations. Can you suggest a solution to my financial problem? AK, Dubai

Debt Panelist 1: Steve Cronin, Founder of DeadSimpleSaving.com

Your financial problems can be linked to three mistakes: trading, trading in cryptocurrencies and trading with money borrowed from credit cards.

Trading is buying and selling assets – any asset – on a regular basis, rather than holding them for the long term.

A small percentage of people make good money trading over the long term. Most people do well occasionally and brag very loudly about their successes.

Then they lose almost everything, but are very quiet about these losses.

People new to trading are then inspired by social influencers, trading platform ads and the short trading wins of friends.

It’s pure gambling and you should never do it again, especially with money you can’t afford to lose — and certainly not with borrowed money.

Cryptocurrencies are here to stay in one form or another, but they are still very risky investments.

The risk is significant both for the cryptocurrency you trade or invest in, as well as the platform you use for investment.

Cryptocurrencies can plummet in value due to fraud, pump and dump schemes, failure to deliver on promise, concerns about the value of cryptocurrencies in general or even entire investment markets moving away from risky investments as interest rates rise and people have less money to invest.

Crypto trading platforms can have problems, especially as very few have been around for more than a couple of years.

They may have technical or security issues. They may have invested their own capital or investors bet cash on assets that were far riskier than anyone expected.

They may also face liquidity problems, where there is not enough cash to cover all demands for withdrawals from the platform. Or, again, they could be fraudulent and have stolen your money.

The cryptocurrencies in your wallet on this trading platform may eventually be unlocked if the platform is bought out by a larger company or finds another way to restore its financial situation.

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Cryptocurrencies — in pictures

You should then immediately sell what you have and use it to pay off part of your card debt. If the company does not respond, I expect others will be in the same situation. You should check the news and online forums or social media for updates.

Using a credit card to invest in anything is a very bad idea unless you can pay off the entire card balance each month to avoid interest and late/no payment fees.

Even then, you still pay an extra 3 percent for each transaction. I understand your concern about connecting a bank account to the trading platform, but you could have used a bank account with only a small cash balance, which limits the risk of fraud.

Since you weren’t paying off your card balance every month, you were trading above your means and you would likely still have ended up in debt due to trading losses even if the platform hadn’t frozen your account.

Each card provider has different terms and conditions around rewards and consumer protection, so you’ll need to read the documents associated with your specific card.

However, I highly doubt that there is any protection or reward for investing on cryptocurrency or stock platforms. Such incentives will encourage risky behaviour.

You should now focus on figuring out how to pay off your credit card debt before it grows bigger.

See if you can convert it to a personal loan at a lower interest rate. Find ways to earn extra income, cut your expenses, sell assets you have or borrow money from a relative.

Learn from your mistakes and warn others too so that your trading adventure becomes a useful life lesson instead of a total waste of money.

Debt Panelist 2: Vijay Valecha, Chief Investment Officer, Century Financial

There have been wild swings in global risk markets this year.

Cryptocurrencies, with their extra high-risk and high-beta profile, have been even more erratic in price reaction.

Major cryptocurrencies, including Bitcoin and Ether, have lost more than 60 percent this year. However, some, such as stablecoin TerraUSD and its sister token Luna, have been completely wiped out in market cap.

Reports of cryptocurrency withdrawal problems have become the norm this year.

This is primarily due to a liquidity crisis, as the wild price fluctuations mean that market makers are unwilling to take on counterparty risk.

Most cryptocurrency platforms that offer spot wallet facilities are not subject to a specific regulatory law.

The failure of major developed market nations to classify and regulate the crypto space has only given more room for such exchanges to grow.

I strongly recommend that you check if the crypto trading platform you are using is registered with a regulatory authority.

If it is registered under the purview of a local authority, you should contact authorized personnel and keep the platform provider up to date.

You should also look for a crypto investor community forum and try to confirm if this has happened to other customers of the exchange.

Having a collective bargaining power can sometimes force the authorities to take a “Suo Moto cognizance” of the matter.

In the case of the Terra/Luna cryptocurrency debacle, South Korean authorities asked Interpol to issue a red notice for the arrest of Terra Labs co-founder and CEO Do Kwon following the $40 billion collapse of the digital coins.

Investing in cryptocurrency is often difficult and investors should always use properly regulated exchanges.

However, it is important to note that even a regulated exchange cannot do much to meet its client obligations during a liquidity crisis in the cryptocurrency market.

A better option would be to invest money with a regulated stockbroker or a CFD (contract-for-difference) provider.

With such devices, withdrawal of principal/profit is relatively transparent and straightforward as they do not lock the customer’s money in spot cryptocurrency wallets.

Debt Panelist 3: Carol Glynn, Founder of Conscious Finance Coaching

It is not advisable to use credit cards to buy investments.

The only exception would be to use the card to make the transaction and then immediately transfer from the current account and remove the balance.

But paying an extra 3 percent per transaction is also an expensive extra cost to incur unnecessarily if you have the cash available in your bank account.

Focus on paying off your credit card balance in full as soon as possible.

If you have income, cash or savings, I would advise you to make minimum payments by credit card.

As you have experienced, the fines for late and non-payment and interest charges are very expensive. The interest alone is potentially more than 42 per cent a year.

To add to the cost, interest charged on unsettled amounts, combined with late payment penalties, results in interest not only on the amount originally charged to your card, but also on the penalties and previous months’ interest.

Very quickly you will find that the debt is multiplying.

If you don’t have any savings to spend, can you get a personal loan to clear your credit card debt?

You will save significantly on penalties and interest by consolidating your debt this way. Alternatively, do you have family or friends who you can borrow money from, ideally at a low interest rate?

Credit card protection programs will not help in this situation. They usually provide coverage when you are unable to pay due to loss of employment.

The rewards you can earn on your credit card depend on the type of card you have. You can check the terms of your credit card agreement. Usually earned rewards are listed on the bank’s web portal or mobile app.

When it comes to accessing your cryptocurrency assets, if your emails are continually being ignored by customer service, it’s time to escalate the issue.

Is there a formal complaints process outlined on the platform? If yes, follow the steps outlined there.

The next step will then be to submit a complaint to the regulator the platform is registered with. If you suspect fraud, this will be a police matter in the jurisdiction where the platform is registered.

The Debt Panel is a weekly column to help readers tackle debt more effectively. If you have questions for the panel, write to [email protected]

Updated: 26 October 2022 at 05.00