UK financial Watchdog Warns FTX Crypto Exchange

Sam Bankman-Fried's group is 'targeting' consumers without authorization, according to the FCA

In the latest confrontation between British authorities and offshore digital asset companies, the UK's financial regulator has warned consumers not to deal with FTX, the cryptocurrency exchange managed by billionaire Sam Bankman-Fried.

Financial Conduct Authority stated on its website that the Bahamas-based exchange appeared to be offering products and services in the UK without its approval. "We do not authorize this company, and it targets UK residents," the statement said. As the UK steps up efforts to control the unregulated world of cryptocurrencies, the FCA has decided to take action against FTX, one of the largest exchanges for digital assets.

FTX's chief rival, Binance, has pledged to become fully compliant with regulation and to reapply for UK supervision. According to the FCA, Binance's complex and high-risk financial products pose a significant consumer risk. Binance has "failed" to respond to some of its basic questions, making it impossible to oversee its sprawling operation. A spokesperson for FTX said they believed the regulator intended to warn consumers about a scam impersonating the exchange because some of the phone numbers the regulator listed had been reported as linked to scams. However, the spokesperson acknowledged that the FCA's identified website - ftx.com - is the company's actual website. "FTX is investigating and communicating with regulators," the company said. In response, the FCA said: "It is important we issue warnings as quickly as possible, and we will inform you if more information becomes available." According to an FCA guide, crypto exchanges and wallet providers must register for anti-money laundering supervision if their digital asset activity is "carried on by way of business inthe UK."

Recommended Markets Insight Matthew Elderfield There is a divide between EU and UK crypto regulation. The FCA and other financial regulators worldwide have faced a challenge in protecting consumers and establishing standards in crypto markets where many of the largest groups are based offshore. FTX and Binance, registered in the Cayman Islands, have American affiliates to appease US authorities, but they also offer services in other countries.

FTX's European division announced that Cyprus's financial regulator had granted it an investment firm license as the crypto firm pushes to expand across the continent.

At the time, BankmanFried, FTX's chief executive, said: "Securing a license for the European Union is a crucial step toward becoming one of the world's most regulated exchanges." UK clients dealing with FTX would not be eligible for UK consumer protections such as the Financial Ombudsman or Financial Services Compensation Scheme and would be unlikely to get their money back if things went wrong, according to the FCA." —Crypto Weekly