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UK Financial Watchdog Issues Warning Against Crypto Exchange FTX
FCA says group led by Sam Bankman-Fried is ‘targeting’ consumers without authorisation.
Himanshu S.
9:34 19th Sep, 2022
Policy

The UK’s financial regulator has warned consumers against dealing with FTX, the cryptocurrency exchange run by billionaire Sam Bankman-Fried, in the latest clash between British authorities and offshore digital asset companies.

The Financial Conduct Authority said the Bahamas-based exchange appeared to be offering products and services in the UK without its authorisation, according to a statement on the regulator’s website.

“This firm is not authorised by us and is targeting people in the UK,” the statement said. FTX did not immediately respond to a request for comment.

The move against FTX, one of the largest digital asset exchanges, comes after a bruising battle between the FCA and Binance as the UK steps up efforts to control the often-unregulated world of cryptocurrencies.

The FCA intervened against Binance last year, saying its “complex and high-risk financial products” posed “a significant risk to consumers” and that the world’s largest crypto exchange had “failed to” respond to some of its basic queries, making it impossible to oversee the sprawling group.

Binance, one of FTX’s chief rivals, has pledged to become fully compliant with regulation and to reapply for supervision in the UK.

Crypto exchange and wallet providers have to register with the FCA for anti-money laundering supervision if their digital asset activity is “carried on by way of business in the UK”, according to an FCA guide.

The FCA and other financial regulators around the world have faced a challenge trying to protect consumers and impose standards in crypto markets, where many of the largest groups are based in offshore jurisdictions. Both FTX and Cayman Island-registered Binance have set up American affiliates to appease US authorities but offer services in other countries from their international base.

FTX’s European division this month announced that Cyprus’s financial regulator had granted it an investment firm licence, as the crypto firm pushes to expand across the continent. Bankman-Fried, FTX’s chief executive, said at the time: “Securing this licence in the European Union is an important step in achieving our goal of becoming one of the most regulated exchanges in the world.”

The FCA said UK clients dealing with FTX would not have access to UK consumer protections such as the Financial Ombudsman or Financial Services Compensation Scheme and would be “unlikely to get [their] money back if things go wrong”.

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