UK’s Financial Conduct Authority (FCA) has issued a stern warning to two Bitcoin investment firms; Local Bitcoin and BK Coin, two companies that are alleged to be owned and operated by the same group. According to the FCA, the two cryptocurrency firms were offering crypto investment services without authorization. Although Local Bitcoin claims that it has been operating in accordance with EU regulations, the FCA stressed that the firms were giving out false details and they are not licensed to offer financial services in the UK. Investors were also warned to carry out adequate research before investing in any firm to minimize fraud cases.
Enforcing The Law
Both Local Bitcoin and BK Coin have been providing a broad spectrum of cryptocurrency investment services to their UK customers. The two companies have also managed to attract many investors; Local Bitcoin alleges to have more than 260,000 active users in 50 countries and processing over 125,000 transactions. The firm, which claims to be headquartered in Northumberland, has a peculiarly similar name to that of the popular peer-to-peer trading platform localbitcoins.com but has no affiliation. On the other hand, BK Coin claims that it’s based in London. Since they share the same management, BK Coin has an oddly similar logo and user interface with that of Local Bitcoin Ltd. The only difference is that the Local Bitcoin Ltd website was launched in March 2018, while BK Coin’s website was launched three months prior in January 2018.
The FCA warned users who had trusted the firms with their investments that they might not recover their investment. The body added that neither the Financial Services Compensation Scheme nor the Financial Ombudsman Service will compensate for the investments made through a shady broker or an unauthorized firm. This is because despite similar cases having been reported severally in the past, many investors still lose their money to the scams.
FCA warnings on both Local Bitcoin Ltd and BK Coin come hot on the heels of its recently issued warning against Blackrock Crypto Asset Management Limited and Good Crypto. The two companies were operating clone firms without any affiliation to the registered and recognized firms. Despite Blackrock Crypto Asset Management Limited having a website and a physical address, the UK financial regulator said that the company’s details may be false or mixed with details of the FCA-authorized Blackrock Investment Management (UK) Limited.
In the same vein, on June 11, the FCA issued a warning to all banks and financial institutions on the several transactions risks their institutions are exposed to by the use of cryptos. The regulatory body urged banks to enhance their scrutiny measures to clients who invest in ICOs or trade cryptocurrencies. In this warning, the financial institution leaders were instructed to come up with policies and procedures to be followed by all the clients they serve and also to keep proper records for future reference in case anything goes wrong. To reduce the chances of crypto fraudsters using their financial institutions to conduct illegal activities, the banking leaders were advised to educate their staff on the risks associated with cryptos as well as collect information on the “adequacy of those clients’ own due diligence arrangements.”