Cryptocurrencies plunge after Elon Musk's bitcoin u-turn
New York (CNN)On the morning of April 17, two brothers in Westchester, New York, woke up to learn that they had become millionaires overnight, thanks to an unlikely wager on a cryptocurrency that was originally created as a joke.
Tommy, 38, and James, 42, who have asked CNN not to publish their last names to protect their anonymity, had put a few hundred bucks into an odd digital asset called shiba inu coin — a spinoff of dogecoin, so basically a parody of a parody. One coin was worth a fraction of a cent, but a friend, who happened to be a crypto expert, told them he believed it could be a big moneymaker.
“I kind of thought about bitcoin — that was once a fraction of a penny and now it’s tens of thousands of dollars, and this happens to people, it’s possible,” Tommy said. “I trusted my friend and I figured if it went to zero, that’s OK. I thought of it as a lotto ticket that wouldn’t expire.”
Less than two months after their initial investment in late February, their lives changed. It was their dad’s birthday, and instead of giving him a card, they made him a millionaire.
Valuations on cryptocurrencies have exploded in 2021. After years of being either ignored or sneered at by Wall Street, cryptos — including established players like bitcoin and lesser-known “altcoins”— are enjoying unprecedented investor interest. Bitcoin is up nearly 70% since January, and dogecoin, which was started as a joke and is still worth less than a dollar, is up more than 11,000%, according to Coindesk.
But cryptocurrencies are also extremely risky, unregulated investments. Prices are known to swing wildly. And digital currencies bring other unique kinds of risk, such as the potential for a hacked server, a deleted file or a lost password that could leave investors locked out of their funds forever.
James and Tommy rolled the dice, each initially investing $200. They also presented the idea to their mom, dad, sister and a few other family members.
“My mother and sister were skeptical but they each put in $100, too,” Tommy said. “After a few weeks when it was up about 300% they put another $100 in each, and then it kept going up.”
In total, the group put in nearly $8,000.
‘Oh my God’
Prior to the pandemic, the brothers’ primary income came from filming weddings, but the Covid-19 outbreak nearly shuttered their business. Rather than booking 30-40 weddings that year, James said, they did no more than eight.
“We kind of fell through the cracks,” Tommy said. “The government stimulus checks weren’t enough to sustain us. I’m a positive person but it was really tough, and not knowing the future was kind of scary.”
As their shiba coin investment took off, it was hard to believe the change in their fortune. While filming a wedding in mid-April, they kept half an eye on their investment, which had quickly shot up to $100,000. And it kept climbing.
“We woke up the next morning and it doubled. We were like, ‘Oh my god,'” Tommy said.
“Then it went up to $700,000 and I told my brother it’s going to hit a million. I kept refreshing my phone.”
The next day, it happened.
“The day it hit a million — my mom and sister, they didn’t think it was real.”
The family’s initial stake of $7,900? It’s now worth nearly $9 million as of Thursday. CNN Business confirmed the value via their coin wallet and transaction history.
What is shiba coin?
Shiba inu was created less than a year ago — an obvious spinoff of dogecoin, which features a Shiba Inu dog as its mascot. It may have been a joke of a joke, but not many people are laughing now.
Shiba coin, which goes by the ticker symbol SHIB, is up more than 11,000% in the past 30 days, according to the site CoinGecko.
Earlier this week, Ethereum co-founder Vitalik Buterin made headlines by donating $1 billion worth of shiba coin to a Covid-19 relief fund in India.
The crypto, known informally as a memecoin or altcoin, has also won a handful of celebrity backers from former boy band stars to NFL pros.
Backstreet Boys star Nick Carter, who is seen frequently tweeting the hashtag #Shiba and #ShibArmy.
“As an enthusiast and investor in cryptocurrency, seeing the announcement about SHIB and Ethereum creator Vitalik Buterin’s donation to India was very exciting,” Carter told CNN Business in a statement. “I believe there is an incredible future for Crypto – especially knowing how it can be used for good and more importantly, to save lives.”
NFL star Antonio Brown tweeted Wednesday to his over 1 million followers that he too has invested in this cryptocurrency.
“The shiba business is booming and crypto is the way to go,” Brown told CNN Business on Thursday. “It’s a new way of investing.”
There are thousands of cryptocurrencies, and bitcoin and ethereum account for nearly two-thirds of the entire $2.3 trillion global crypto market. And while they can be quite profitable, as James and Tommy have learned, they are also extremely volatile.
For example, bitcoin, by far the most established crypto in use today, plunged a staggering 12% this week after Elon Musk reversed Tesla’s plans to accept bitcoin as payment, citing environmental concerns. And dogecoin, one that Musk has regularly hyped on Twitter, plummeted nearly 20% after Musk’s appearance on “Saturday Night Live” last weekend.
Advice from Tommy and James
As for how Tommy and James plan to use their money, they aren’t entirely sure. They have yet to completely cash out their investment, and are holding out for something called ShibaSwap, a decentralized exchange platform.
“This has happened so quickly it’s hard to even comprehend the things you can do with this money,” Tommy said.
But the first order of business is to help mom and dad.
“My parents’ house needs a new roof, so I’ll take care of that.”
For anyone thinking of trying to replicate the brothers’ wild success, James offers a word of warning: “Don’t put in any money that you aren’t willing to lose,” he said. “The meme tokens are very high-risk and you really don’t know what is going to happen with them. We know this is not what typically happens, although shiba has changed our lives. When you see it fluctuate so much, it does keep you up at night.”
— CNN Business’ Paul R. La Monica contributed to this article.
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