The cryptocurrency industry has been getting hit hard lately, and Black Americans who have tapped in seem to be amongst that group.
According to an Ariel and Charles Schwab survey from January, 25 percent of Black investors owned crypto while 15 percent of white investors did. Many Black people became immersed in crypto as an alternative way of building generational wealth.
However, a turn of events in the digital space has more negatively impacted them than their counterparts.
As previously reported by AfroTech, FTX has been one of the numerous crypto companies to take big hits. The blows have affected thousands of Black investors who have watched their savings vanish and the value of their investments take a dive, The Atlantic reports.
“Cryptocurrencies as a whole have lost more than $2 trillion in paper value in the past year,” the outlet details.
In addition to looking to build wealth, Black investors turned to crypto to avoid traditional finance. From redlining to denial of loans and wrongful home appraisals, the group has come to not have a great relationship with the discriminatory institutions that tend to not work in their favor. But now, what was intended to spark change has taken a sharp turn.
“We saw the same thing happen with the internet bubble, when we saw many African American first-time investors chasing hot internet stocks,” John W. Rogers, founder of Ariel Investments told the outlet. “So many people made so much money over the last seven or eight years, and it is natural to fall into the trap of chasing what worked yesterday.”
According to a Kansas City Federal Reserve report in June 2022, Black Americans were more likely to own cryptocurrency than stocks or mutual funds compared to white Americans.
Along with everyday people, Black celebrities were also at the forefront of endorsing crypto companies. But with the recent lawsuits flying, they’ve been turning their back on what was once all of the hype.
After becoming involved in FTX’s legal battle as a defendant, Shaquille O’Neal came forward to clear his affiliation, as previously reported by AfroTech.
“People know I’m very, very honest,” O’Neal told CNBC Make it. “I have nothing to hide. If I was heavily involved, I would be at the forefront saying, ‘Hey.’ But I was just a paid spokesperson.”
While there were celebrities who were enticed by the check, there were also those who came in for the better good that fell victim to having lessons learned about crypto. Take, for example, Miami Heat’s Udonis Haslem who claims that he was “gypped” out of $15 million.
“That’s what my equity had grown to. He didn’t dupe me,” he told Sun-Sentinel. “I signed a contract with a company and that’s part of it.”
“I’m not ashamed of any involvement,” he added. “I came in with pure intentions. My point of it was, ‘You guys are doing a lot for charity. You’re in Miami now. What can you do for my city?’ And that was the stance that I took and we got some stuff done. So hopefully I’ll find somebody else to continue to partner with, to continue to do stuff in the city.”