Amid a rise in cryptocurrency scams, the UK Financial Conduct Authority reveals an ongoing investigation into 50 crypto firms.
Amid A Rise In Cryptocurrency Scams, The UK Financial Conduct Authority Reveals An Ongoing Investigation Into 50 Crypto Firms.
News source:
The Financial Conduct Authority (FCA), the UK's financial
watchdog, claims to have 50 current investigations into cryptocurrency business
operators, including criminal probes. The agency also revealed that it
investigated 300 cases relating to unregulated crypto asset enterprises over
the course of six months, from September 2021 to September 2022, noting that a
number of those cases could be tied to fraudulent operations. The FCA also
revealed that it has received 16,400 inquiries regarding potential crypto
frauds, up 33% from the same period in 2020.
Consumers reported 4,300 possible crypto frauds on the FCA's
ScamSmart website over the six-month period ending in September last year. This
greatly outnumbered the 1,600 reports for the next most common type of pension
transfer fraud, according to the authority. Crypto fraud checks on the FCA's
ScamSmart tool increased by 49% in the six months leading up to September 2021,
according to FCA data.
"When it comes to investing, consumers need to feel
confident, and the data we've released today demonstrates how common frauds
are. Before investing, make sure you know who you're dealing with, that they're
FCA-approved, and that you've done your homework to understand the dangers
involved "In a statement, FCA markets executive director Sarah Pritchard
said. The FCA keeps track of some 250 companies that "appear to be engaged
in crypto-asset activity that is not registered with the FCA for anti-money
laundering purposes."
While the FCA plays a limited role in crypto firm
registration for anti-money laundering purposes, it has no authority over
crypto assets. Unsuspecting customers have been enticed to invest in crypto
tokens that have been released without due diligence.
Cryptocurrencies' opaque nature also makes it difficult for
regulators to utilise traditional enforcement tactics to decrease the risk of
consumer harm. The FCA has already cautioned (via Investment Week) that its
current toolset is less successful than traditional financial products in
keeping the crypto market in check.
Susannah Streeter, a senior investing and markets analyst at
Hargreaves Lansdown, believes that tools like the watchdog's ScamSmart campaign
can help educate customers about fraud strategies and safeguard them.
"Rather than just flashing the warning lights about the
number of people being enticed into unsafe crypto investments and frauds,"
Streeter told Reuters, "the financial watchdog is now being a lot stricter
on banning dubious enterprises from entering the market."