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A rough week for the digital asset space in the United Kingdom saw the industry under fire from multiple directions, emerging with some work to do to win over regulators and the general public alike.
A major U.K. digital asset firm was shut down for promoting a $1.7 billion Ponzi scheme. Meanwhile, a director at the country’s top financial sector regulator told digital asset firms to help clean up markets and fight a £24 billion ($26 billion) money-laundering problem, and to top it off, a new academic study revealed that the U.K. public perceives digital asset miner to be of less valuable to society than escorts.
Rogue advice firm shut down
Kicking off the digital asset industry’s PR septimana horribilus in the U.K., on May 13, a digital asset advice firm, Amey Finance Academy Ltd, was shut down after investors lost money and the director failed to keep proper accounts. The firm wound-up at the High Court following investigations into the company’s trading by the Insolvency Service, the U.K. government agency investigating financial wrongdoings in the insolvency space and supporting those in distress.
Amey Finance Academy was created by Desmond Amey, the company’s sole director and shareholder, in 2018 to offer financial education and advice on digital asset investments.
Amey described himself as a wealth creation expert and offered assurances to consumers that their digital asset investments were solid, according to the Insolvency Service. However, complaints were made that consumers lost money in investment opportunities, and Amey Finance Academy was classified by the U.K.’s financial sector watchdog, the Financial Conduct Authority (FCA), as providing financial services or products in the U.K. without its authorization.
“Desmond Amey used Amey Finance Academy to recklessly persuade individuals to invest in cryptocurrency schemes and mislead them about the risks of doing so,” said Mark George, Chief Investigator at the Insolvency Service.
“The failure to deliver adequate accounting records and a general lack of transparency shown has prevented the Insolvency Service from establishing the true extent of the company’s activities, its assets and liabilities, or the use of £5 million which passed through the company’s bank account between October 2019 and March 2022.”
Amey was accused of misrepresentations, such as assuring one customer, who went on to lose all the money they invested, that their investment would not drop below 90%. In WhatsApp messages seen by Insolvency Service investigators, Amey told another customer the investments were “100 certy” and to “trust me bro”.
Amey Finance Academy promoted digital asset schemes run by other companies such as HyperFund which raised more than $1.7 billion from investors worldwide.
However, warnings about HyperFund were issued in the U.K. and New Zealand, and in January 2024, the U.S. Securities and Exchange Commission (SEC) charged the company’s founder and its top promoter with fraud.
The story was made murkier by Amey’s contradictory information about his company’s relationship with HyperFund. He said that he only used the Amey Finance Academy business bank account to help people buy digital assets via a separate company called Bleuguava.
Amey released a video on YouTube in October 2023 implying he still had a presence in Canary Wharf, London, but he had, in fact, been evicted for failing to pay rent in January of that year.
Despite his customers’ huge losses and his failure to register with the FCA, it’s unclear what, if any, fines and charges Amy will eventually face, now that his company has been wound down.
FCA tells industry to help fight money-laundering
A couple of days after one U.K. government agency announced the shutting down of a fraudulent digital asset advice company, the director of another agency made it clear he expects the industry to start helping clean up its own mess.
On Wednesday, FCA director Matthew Long said digital asset firms should be involved in cleaning up markets and fighting a money-laundering problem that he claimed is choking tech innovation in the United Kingdom.
“I still see £24 billion of money laundering in crypto transactions, and that’s a low estimate,” said Long, who is director of payments and digital assets at the financial sector watchdog, speaking at a conference in London on Wednesday.
In response to a question on how the FCA can find a balance between encouraging innovation and creating rules that protect investors and provide for safer markets, Long went on to say that he was eager to see digital asset firms helping to fight money laundering, and “using innovation to do that.”
The FCA is currently putting together a regulatory framework for digital assets in the U.K., following the passage into law of the Financial Services and Markets Act (FSMA) 2023 on June 29, 2023.
The bill extended the banking rules of the previous FSMA iteration to stablecoins and digital assets and gave the FCA and Prudential Regulation Authority (the country’s banking sector watchdog) the necessary powers to begin implementing the HM Treasury’s goals set out in its February 2023 consultation on the Future Regulatory Regime for Cryptoassets.
This included establishing an issuance and disclosure regime tailored to digital assets, strengthening the rules that apply to financial intermediaries and custodians of digital assets, and adopting a bespoke, digital asset-specific market abuse regime.
The implementation process of the FSMA 2023 will be gradual, likely not being fully implemented until 2025. But on April 15, the U.K.’s Economic Secretary, Bim Afolami, announced plans to introduce new laws to regulate the issuance and usage of stablecoins by June or July.
“We are now working at pace to deliver the legislation to put our final proposals for our regime in place,” Afolami said. “Once it goes live, a whole host of crypto asset activities, including operating an exchange, taking custody of customers’ assets and other things, will come within the regulatory perimeter for the first time.”
With new rules potentially imminent, this week’s comments by FCA director Long were a timely reminder that the agency overseeing the digital asset space is not a light touch and will be expecting increasing cooperation from the industry going forward.
A digital asset industry image problem
The icing on the U.K. digital asset industry’s bad week cake—in PR terms at least—was the publication of a new sociology study titled “Occupational prestige and occupational social value in the United Kingdom: New indices for the modern British economy.”
Produced jointly by the Oxford Internet Institute of the University of Oxford and the Nordic Centre for Internet and Society of BI Norwegian Business School, the research sought to explore how the U.K. public perceives various occupations in terms of “prestige” and “social value.”
Based on “comprehensive and recent evidence from 2429 respondents,” the study looked at 576 occupation titles, two of which were “Cryptocurrency Miner” and “Cryptocurrency Trader.”
For each listed occupation, respondents from across the U.K. were asked to indicate on sliders how they would rate the prestige and social value of the occupation on a scale of 0 (the lowest or worst score) to 100 (the highest or best)—one slider for prestige and one for social value.
The scores were then pooled, and average (mean) numbers were produced for each occupation.
Unfortunately for the digital asset industry’s sense of self-worth and societal value, “cryptocurrency” traders and miners both placed below acupuncturists, food bloggers, online video content creators (e.g., YouTubers), taxidermists, and ostrich farmers in terms of their “mean occupational social value.”
This means that the public (at least the section of it that took part in the study) viewed digital asset mining and trading as of less value to society than YouTube influencers and people who stuff dead animals.
In a more direct comparison, stockbrokers scored almost double on the social value scale than digital asset traders (44.14 compared to 27.92).
The highest ranked professions in terms of social value were, predictably, healthcare and emergency services workers, the top five being: ambulance paramedic (83.96), general practitioner (83.61), firefighter (81.77), cardiologist (81.52) and ambulance driver (80.81).
Digital asset proponents can find some solace in the fact that miners and traders managed to score—marginally—higher than spam email writers, beauty bloggers, pornstars, pirates, fortune tellers, and “the unemployed.”
However, it seems the two and half thousand respondents had a particularly poor perception of digital asset miners, an occupation that is obviously in need of an image overhaul. Damningly, “cryptocurrency miner” managed to score below “escort” in terms of social value (26.51 and 27.71, respectively)—perhaps miners can console themselves that it was just U.K. traditionalist bias naturally favoring the oldest profession in the world over one of the newest.
The industry did score slightly higher on the ‘prestige’ scale, which the study defined as “an occupation’s societal status and the respect it accrues (often referring to highly-paid and education-heavy occupations such as barrister and doctor).”
For reference, the top five professions considered most prestigious by the respondents were cardiologist (81.96), aircraft pilot (80.69), judge (80.20), aeronautical engineer (79.51), and general practitioner (78.10).
Digital asset miners and traders scored 36.08 and 36.44, respectively, a slight improvement on their woeful—perceived—social value, but still below those in the apparently more prestigious and well-respected occupations of warehouse manager, online content moderator, herbal medicine technician, telephone installer, basket maker, and—yet again—taxidermist.
A bad week for the industry’s image—self and public—in the U.K. indeed.
Although a bittersweet reading might suggest that if public perception is already in the gutter, surely it can only get better. If so, perhaps, one day, society will hold digital asset workers up on that lofty pedestal, alongside its most treasured taxidermists.
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