The FCA Receives Over 16,000 Crypto Complaints – What Actions Can Regulators Take?

In a press release, the FCA (Financial Conduct Authority) reported that it received 16,400 complaints in 2021, which was a 30% increase from 2020. The leading financial regulator in the UK also noted that fraudulent schemes involving cryptocurrencies are among the fastest-growing types of online financial crimes. 

The FCA reported that it had 300 open cases among the financial services it has licensed and has added 172 firms to its unregulated cryptoassets watchlist. The government agency reaffirmed its commitment to keeping consumers safe from fraudulent financial services that target UK consumers and claim to be based locally. In 2021, the FCA published 735 customer alerts about unauthorised firms. 

The FCA is consistently forthright about reporting on the problem of online schemes and warning consumers. It is also stating its intention to give potential applicants for FCA licences more scrutiny and inspect financial services that already carry FCA licences. 

In addition, the regulator frequently warns the public about unregistered financial firms that claim to hold FCA licenses or are copying the names of legitimate brokers to clone them and mislead their customers. 

Which Types of Fraud Are The Most Common Offenders

According to the FCA’s findings, the most common types of financial fraud are:

  • Boiler room schemes
  • Cryptocurrency frauds
  • FCA-impersonation or clone brokers

Although illegal cryptocurrency schemes are a separate category, boiler room and clone brokers are often focused on bitcoin or other digital assets, so these categories intersect significantly. 

Boiler room schemes can be used to push any type of trading product, although with unregulated deals, often no trading actually takes place. These schemes can be characterised by aggressive tactics. They often try to track down potential traders on social media or send WhatsApp or email spam. Some may even use cold-calling, especially to target older consumers. 

Boiler room schemes are so-called because they apply pressure. They will tell potential traders that they must act now to get a chance of a lifetime deal that will provide triple-digit returns. These schemes target people who may be experiencing debt or financial distress and feel they might as well take a chance, which can be the same logic used by those with gambling problems. Of course, these deals are often fake, and the fraudsters steal the money from their customers. 

Cryptocurrency fraud is growing fast and encompasses all types of fraud, including Ponzi, MLM and unregulated broker schemes. These culprits often hide ill-gotten gains in anonymous bitcoin wallets on the blockchain. 

The FCA has been focusing on warning consumers about brokers who claim to be regulated by the FCA but who, in reality, have no licence. In some cases, these firms will take on names that are very similar or almost identical to those of FCA-regulated financial entities. 

What Are Regulators Like the FCA Doing About Fraud?

To combat the rising tide of financial fraud, the FCA  is taking tangible steps to crack down on these schemes and protect consumers. 

Tight Standards on Licensing

The FCA has the reputation of being one of the most selective regulators, which is reassuring to consumers. A large number of financial services applying for FCA licences are turned down because they do not meet the requirements needed for an FCA licence. These high standards ultimately protect UK consumers from  unregulated brokers. 

Regulatory Oversight

After financial services are granted FCA licences, they must submit documentation on a regular basis so they can retain their licences. Less stringent regulators may issue a licence and then leave brokers alone. Consistent oversight protects consumers from regulated brokers who may undergo bad management or that may actually be engaged in illegal activities. 

Warning the Public

The FCA issues hundreds of warnings about false financial services that are designed to mislead customers. Many of these pretend to have an FCA licence and can easily trick the public into thinking they are legitimate. 

Taking Action Against Harmful Financial Services

If the FCA has a reason to believe that its licence-holders are engaged in harmful or illegal financial activities, it will launch an investigation. Currently, the FCA is investigating 300 of its licencee, some of whom may lose their licence if it is discovered that they are not operating legitimately. 

In many cases, if the financial firms are not FCA regulated, they are outside of the regulator’s jurisdiction. However, the FCA works together with outside investigators and law enforcement to take action in cases of illegal financial activity. 

Cryptoasset Supervision Team

Although the blockchain is not yet regulated, the FCA does ensure that all of its registered financial firms comply with Money Laundering Regulations (MLRs). It accomplishes this through a Cryptoasset Supervision Team, which ‘is responsible for identifying, managing and mitigating risks of potential harm’ coming from cryptocurrency services. 

What Regulators Can Do for You

If you have a complaint after losing money to an unauthorised broker or a suspected financial fraud, it is important to seek assistance. The FCA can be useful in identifying issues with brokers it regulates or with those that falsely claim FCA licences. However, the majority of illegal financial schemes are outside of the jurisdiction of the FCA, and it is advisable to seek assistance in addition to regulators. 

MyChargeBack will act on your complaint after an initial consultation and will launch a thorough investigation to locate your funds in suspicious bitcoin wallets. We use crypto trace technology and cointracking tools to uncover patterns of transactions that are essential or unmasking the identities of those involved. With our investigation reports, law enforcement can take action against the suspected illegal schemes. 

If you have lost money to a cryptocurrency scheme, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have developed working relationships with law enforcement agencies worldwide, have extensive knowledge of the dynamics of crypto recovery and can improve your prospects of getting your funds back.