Imagine waking up tomorrow morning to discover that the company holding your savings has been hacked and billions of pounds have disappeared.

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You immediately contact the company, desperate to know whether your money is safe.

But there’s a problem. Unlike money in a traditional bank account, your cryptocurrency investments may not benefit from the financial protections you’ve come to expect, which could mean that if the company cannot recover your money, you could face devastating losses.

That is the frightening reality of the risks facing cryptocurrency investors, and last week’s extraordinary events should serve as a massive wake-up call.

The world’s largest cryptocurrency exchange, Binance, has suffered a staggering $6.3 billion cyberattack (approximately £4.8 billion), in what has been described as potentially the biggest theft in history.

Let that sink in. Almost FIVE BILLION pounds stolen in a cyberattack.

The FBI has attributed the attack to hackers linked to North Korea.

Binance says it will cover customers’ losses and has already replaced approximately 90% of the stolen assets, with arrangements being made to replace the remainder.

That commitment is welcome, but it raises a much bigger question: What would happen if the next cryptocurrency exchange to suffer such an attack didn’t have the money to reimburse its customers?

Who would protect those investors?

Who would compensate them?

And who would be held accountable?

As a consumer lawyer, these questions concern me far more than the fluctuating price of Bitcoin, because while cryptocurrency has become increasingly mainstream, consumer protection has not necessarily kept pace.

Millions of people around the world now buy, sell and hold digital currencies.

Some regard cryptocurrency as an investment. Others see it as the future of money and many ordinary consumers are attracted by the prospect of making substantial returns.

But far too many people still don’t fully appreciate that buying cryptocurrency is not the same as putting your money into a bank account.

If your UK bank collapses, eligible deposits are generally protected by the Financial Services Compensation Scheme, subject to its limits and........

© LBC