U.K. Financial Regulator FCA Warns Against Using FTX
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The FCA has previously warned U.K. consumers against FTX rival Binance.
FCA Sounds Alarm on FTX
The Financial Conduct Authority has posted a caution about FTX.
The U.K. financial watchdog published a statement on its website Friday, noting that the exchange is not registered to offer financial services in the U.K. “This firm is not authorised by us and is targeting people in the UK,” the note read. “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.”
The FCA oversees more than 50,000 financial companies in the U.K. to ensure that they comply with regulations. It requires crypto-related companies to register and comply with anti-money laundering regulations, including implementing KYC restrictions for customers.
The warning against Sam Bankman-Friend’s multi-billion dollar powerhouse is yet another instance of the FCA sounding the alarm on the digital assets sector. The regulator has been keeping a close eye on the space since digital assets boomed in 2021, warning companies against misleading marketing campaigns and banning all Bitcoin ATMs in the country.
It was also one of several regulators to step in against Binance over its regulatory practices last year, posting a similar warning to the FTX post to flag that the world’s top cryptocurrency exchange posed “a significant risk” to U.K. consumers. Binance made several big changes in response to regulatory attention, including introducing mandatory KYC restrictions and reducing its maximum leverage offering from 100x to 20x.
Similar to Binance, FTX operates from an offshore jurisdiction. While both companies run U.S. arms to satisfy the SEC and other American regulators, their main entities offer a wider range of products and services that do not fall under U.S. regulations.
Bahamas-based FTX won a licence to operate in Cyprus this month, but it’s yet to receive a permit to operate in the U.K. “Securing this licence in the European Union is an important step in achieving our goal of becoming one of the most regulated exchanges in the world,” said Bankman-Fried at the time.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.