FCA increases scrutiny over cryptocurrency-related business

• There are over 84 crypto-related companies under investigation.
• The regulator adopts tough approach to the industry.

The UK Financial Conduct Authority has taken a  tough approach towards crypto-related companies, the Financial Times reports.  

The financial watchdog in the UK is investigating 87 cases related to digital assets, which is 74% higher than a year ago.  This number relates both to full-blown investigations and cases of early-stage scrutiny.  

According to the regulator’s estimates, customers lost over   £27 million to cryptocurrency and foreign-exchange scams.  

However, thee industry experts consider this tough approach as a positive development as it proves that FCA is determined to enforce the law in the cryptocurrency market.

“For cryptocurrency businesses acting lawfully these statistics will be encouraging “” they want bad actors pushed out,” David Heffron, a partner at a law firm Pinsent Masons, commented.

In the wake of Bitcoin’s over 100% rise since the beginning of the year, the public may be more vulnerable to fraudulent get-rich-quick schemes, the regulator says.  

Moreover, cryptocurrency businesses mostly do not require physical assets or initial investments, which makes it easy to set up. Many scammers use social media engineering and impersonate celebrity endorsements and pictures to make them look more credible.

Also, fraudsters employ old-fashioned boiler-room schemes with a new twist.  They promise unrealistically high returns to encourage victims to invest more. However, when a customer attempts to withdraw money, eventually they disappear and stop answering to the requests.