Rising Number of Cryptocurrency Scams in the UK. FCA Opened 432 Cases

The United Kingdom's Financial Conduct Authority (FCA) has opened 432 regulatory cases regarding possible crypto scams or unregistered businesses, according to the regulator's fourth Consumer Investments Data Review published this week. The document aggregates data from April 1, 2021, to March 31, 2022.

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The FCA saw an increase in enquires about cryptocurrency scams (59%) during the reported period. Although many consumers contacted the financial watchdog before they were scammed or their funds were stolen, 79% of them reached the regulator after their initial investment. Regardless, it has allowed the FCA to initiate regulatory proceedings against a higher number of potential fraudsters.

“More cases being referred to our crypto asset supervision team about potentially unregistered crypto asset businesses and potential scams, including through our improved detection of online promotions,” the FCA wrote in the newest report.

While the FCA is not responsible for regulating the cryptocurrency market, it is required to control some of the crypto companies' compliance with the Money Laundering Regulations (MLRs). Based on its market monitoring activities and consumer reports, the regulator was able to open 432 cases of potential unregistered or scam crypto asset businesses from April 2021 to March 2022.

As in the previous report from last year, cryptocurrencies were among the products most frequently reported to ScamSmart as potential scams. Pension transfer to a new scheme came second, followed by bonds and stocks.

2724 Cases Involving Investment Scams or High-Risk Investments

As of March 31, 2022, the FCA supervised 6,531 firms in the UK investment market. In the area of potential investment scams or high-risk investments, the regulator handled 2,724 cases in the reported period, +1,000 more than in the previous year. Additionally, the regulator managed to finalize 2,350 of these cases, achieving a closing rate of 78% (previously 72%).

The FCA identified potential fraudsters active in the contracts for difference (CFDs) market, operating under the EEA passport regime and the UK's temporary permissions regime (TPR) while preparing to apply for full FCA authorization. 16 of approximately 100 CFD providers aroused the FCA's suspicions, leading to a suspension of their operations in the UK. According to the regulator's calculations, this saved consumers as much as £100 million per year.