An investigation unveils organized crime groups that exploited lax regulations in crypto.
According to the investigation, UK-based crime groups carried out large-scale fraud schemes in the cryptocurrency industry.
The inquiry revealed 168 UK companies accused of fraudulent cryptocurrency or foreign exchange trading schemes. Half of the cases were linked to a Chinese scam known as "pig-butchering."
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The "pig-butchering" scam involves building trust with the victim before ultimately taking their money. The majority of the 168 companies were registered in London, with 47 registered in a single South Croydon location.
Several firms were linked through domain registrations, but details about the real owners were scarce due to loopholes in the Companies House registration system. A Companies House acknowledged the issue by stating:
We are aware of the misuse of the company register to support illicit activity and recognise the difficulties faced by those affected by this.
Victims reported being approached through social media, dating sites, or WhatsApp and being offered an investment opportunity.
According to a victim who lost $536,800 in a scam linked to a UK-registered company, the UK's reputation as a legitimate business location was used to give these companies "sham credibility."
A Financial Conduct Authority (FCA) spokesperson advised crypto asset holders to be more careful.
Crypto assets are unregulated and high-risk, which means people are unlikely to have any protection if things go wrong. If people choose to invest in crypto assets, they should be prepared to lose all their money.
Interviewees stated that despite extensive evidence of fraudulent activity, there is a need for increased regulation.
In other related news, British policymakers are divided on the issue of whether or not to prohibit the sale, marketing, and distribution of derivatives for retail investors.
