What are the risks associated with shares on loan in the crypto market?

3 answers

• BovettApr 07, 2021 · 4 years ago
  Investors should be cautious when it comes to shares on loan in the crypto market. One of the main risks is the potential for price manipulation. When shares are on loan, it allows the borrower to sell those shares, which can lead to an increase in supply and a decrease in price. This can negatively impact other investors who are holding the same cryptocurrency. Additionally, there is a risk of default by the borrower, which could result in loss of the loaned shares. It's important for investors to thoroughly research and understand the risks associated with shares on loan before participating in this type of investment.
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• coysAkseliOct 08, 2021 · 4 years ago
  Shares on loan in the crypto market can be a risky investment. One risk is the potential for market manipulation. When shares are on loan, it allows the borrower to influence the market by selling or buying large quantities of the cryptocurrency. This can create artificial price movements and volatility, making it difficult for other investors to make informed decisions. Another risk is the possibility of the borrower defaulting on the loan. If the borrower fails to return the loaned shares, the lender may suffer financial losses. It's crucial for investors to carefully assess the risks involved and consider their risk tolerance before engaging in shares on loan in the crypto market.
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• ky XJul 14, 2024 · a year ago
  Shares on loan in the crypto market carry certain risks that investors should be aware of. One of the risks is counterparty risk. When shares are on loan, there is a risk that the borrower may default on the loan and fail to return the shares. This can result in financial losses for the lender. Additionally, there is a risk of market manipulation. Borrowers can use the loaned shares to manipulate the price of the cryptocurrency, which can negatively impact other investors. It's important for investors to conduct thorough due diligence and carefully consider the potential risks before participating in shares on loan in the crypto market.
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