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UK watchdog warns consumers of dealings with FTX

UK watchdog warns consumers of dealings with FTX

THE FCA has warned consumers to steer clear of cryptocurrency exchange FTX, which is selling products and services in the UK without authorisation from the regulator.

The FCA says consumers should be wary of any dealing with FTX, which received a European trading licence in Cyprus in March, but has yet to register with authorities in the UK.

Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised or registered by the regulator.

"This firm is not authorised by us and is targeting people in the UK," states the FCA. "You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong."

FTX in January raised $400 million in a Series C funding round that valued the cryptocurrency exchange operator at $32 billion. It has since made a string of investments and acqusitions across the crypto sector, including Coinfeeds, BlockFi, Embed, Bitvo, Dave and Robinhood.

Commenting on the FCA's intervention, crypto disputes lawyer Kate Gee from law firm Signature Litigation, says: "In practice, crypto companies have found the FCA’s registration process to be slow and cumbersome, and many have chosen to look elsewhere for their registration - for example, FTX is registered in the Bahamas and recently obtained a licence from the Cypriot financial authorities that permits it to provide services in the EU.

"At a time where other global regulators are perceived to be moving more quickly than the FCA, this warning against dealing with FTX may be intended to encourage it and others to commence - and persevere with - the FCA’s registration process, in the same way that Binance and Crypto.com recently have done."

Update: The FT has since reported that FTX was in talks with the FCA prior to the regulator issuing their warning. Bankman-Fried told the masthead that he was suprised by the FCA's warning, as the company had been "in discussion with the FCA about licensing for a while."

This piece was updated on the 23.09.2022

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