Business 2 January 2019Ed Drake
UK regulator launches fraud probe into 18 crypto companies
The UK financial regulator has launched fresh investigations into suspected fraud and illegal dealings at a number of cryptocurrency companies operating in the country, in the latest example of authorities cracking down on rogue crypto firms.
Reported in the Financial Times, the Financial Conduct Authority launched the latest round of investigations over the weekend as part of an operation to clean up the crypto sector, with as many as 18 firms under formal investigation.
The regulator also issued warning notices or alerts to a further dozen or so operators, on suspicions that they may be involved in promoting cryptocurrency scams.
The move follows investigations launched over the last few weeks into 67 cryptocurrency firms in the UK, of which 49 have since been closed with 39 issued with further warnings. At the time, the FCA’s director of strategy and competition, Christopher Woolard, said there was concern about market integrity and mis-selling from cryptocurrency firms.
According to Woolard, “We’re concerned that retail consumers are being sold complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues.”
As prices have fallen, fraudulent crypto investment products have been increasingly exposed, with investors losing significant amounts worldwide from their involvement in these schemes.
However, Gillian Dorner, deputy director of the UK Treasury, said the bear market had afforded time for regulators in the UK to pause and take stock, with a view to establishing the most constructive policy response to rogue firms. Dorner said, “We want to take the time to look at that in a bit more depth and make sure we take a proportionate approach.”
The latest round of investigations shows the extent of unscrupulous crypto companies and investment activity in the UK, where regulators remain concerned about the potential for harming investors. The moves comes at a time of increasing action from regulators worldwide, who continue to apply pressure to firms suspected of promoting unlawful cryptocurrency investments.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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