UK Authorities Arrest Two in $1.3B Illegal Crypto Operation

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated:

June 21, 2024 00:09 EDT

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UK authorities have arrested two people suspected of running an illegal crypto exchange valued at over £1b ($1.3b).

The two individuals, aged 38 and 44, have been released on bail. But they remain under the FCA’s investigation for suspected involvement in the illegal exchange, a statement on Thursday said. Their offices were inspected, and London police seized digital devices from their residences during searches.

The UK has been vigilant of crypto exchanges since Jan. 2021. To operate legally, exchanges must register with the FCA and follow strict anti-money laundering (AML) regulations. The financial watchdog has the authority to shut down any crypto business that violates these rules. Further, breaking them can even lead to criminal charges.

Since taking charge of AML oversight for UK crypto businessess, the FCA has unearthed serious weaknesses in the firms’ controls. This strict stance has led to a high rejection rate for new registrations, with many firms withdrawing applications or facing FCA refusal.

“The FCA has an important role to play in keeping dirty money out of the UK financial system,” Therese Chambers, executive director of enforcement and market oversight at the FCA, said in a statement. “These arrests show we will do everything in our power to stop crypto firms from operating illegally in the UK.”

Proceed with Caution, UK FCA Warns as It Ramps Up Crypto Oversight

The FCA regularly advises people to be cautious about cryptoassets, calling them “high-risk.” This means investors won’t be protected in case they lose their money when things don’t go their way.

A recent report revealed that the watchdog dedicated a substantial portionrestricted to professional investors, or 30%, of its financial crime specialists to overseeing crypto asset businesses. In their efforts to combat financial crime, the FCA’s team of specialists conducted a comprehensive review process, including 231 in-depth analyses and seven on-site visits.

The FCA’s wider investigations also unearthed 375 potential financial crime cases, with almost a quarter connected to crypto assets.

Separately, in a recent policy shift, the regulator greenlit crypto asset exchange-traded notes (cETNs) on recognized exchanges. However, these investment products are restricted to professional investors, such as investment firms and regulated lenders, due to the inherent risks involved.