The UK’s Financial Conduct Authority (FCA) has issued a consumer warning regarding FTX’s unauthorized operations within the United Kingdom’s legal system.
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”.
But YouTubers said it was "Safe"!
— Arny Trezzi (@arny_trezzi) September 19, 2022
According to the FCA, FTX is not authorized and is targeting UK residents, and “virtually all organizations and persons providing, marketing, or selling financial products or services must be authorized or registered.”
Why such action?
According to the FCA, since August 2020, businesses dealing in digital assets and complying with Money Laundering, Terrorist Financing, and Transfer of Funds Regulations are being listed.
Currently, 37 companies are listed on that list, including cryptocurrency exchanges Gemini, Kraken, Galaxy Digital, and eToro, as well as challenger bank Revolut on provisional registration.
The Financial Conduct Authority (FCA), UK’s chief financial watchdog, has issued a warning over crypto exchange FTX’s business into the country’s regulated financial sector. pic.twitter.com/w8VbWeb5C5
— Manvel Mamoyan (@manvel_mamoyan) September 19, 2022
In a blog post on the specifics of registration, the FCA warns that firms that have not ceased trading face criminal and civil penalties.
Fried’s Bahamas-based company, Sam Bankman-FTX, has no immediate indication of what will happen following the warning or whether they will be given a chance to negotiate their situation.
An FTX spokesperson said: “We are investigating the situation and have contacted the appropriate authorities since we think someone is pretending to be FTX. But, unfortunately, the numbers given by the FCA do not belong to FTX.”
In its statement declaring Binance’s cryptocurrency exchange unlicensed in the UK, the FCA has a long history of being notoriously strict on those businesses dealing in cryptocurrencies. As a result, Binance can still not do regulated business in the UK despite complying with all criteria, according to a follow-up FCA update two months later.
The FCA cautions those who deal with unregulated firms that they’re unlikely to get their money back from these unregulated industries if things go wrong since they won’t be covered by Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS).