The UK is home to at least 168 companies accused of running cryptocurrency or currency fraud scams.according to an independent analysis.
A joint investigation by the Bureau of Investigative Journalism and The Observer media published on January 29 found that organized crime groups use the UK as a base due to its “lax regulation”.
The actual number of UK-based cryptocurrency or forex companies implicated in scams is likely to be well over 168as the figure was calculated by reviewing lists of suspected fictitious companies and cross-referencing them with reports of fraudulent activity on various websites.
About half of the companies found were linked to so-called “pig-butchering scams”.
A “pig-butchering” scam is an insidious scheme in which the scammer builds trust with the victim -often incorporating romance- before convincing her to deposit money or cryptocurrency into a trading platform or virtual wallet that the scammer controls.
Then, the scammer continues to “fatten” the victim and build more trust before convincing them to transfer a much larger sum, then taking the funds.
According to the report, victims were often contacted through social media or dating websites such as Tinder.
In addition, many of the victims interviewed in the report said that the companies appeared more legitimate by being based in the UK, and stated that they would not have fallen for the scam if the companies had been located elsewhere.
Registering a company in the UK costs as little as £12 ($14.85) and does not require any form of identificationwhich makes it easier for fraudulent companies to register there and acquire “false credibility”.
Nevertheless, businesses are required to provide a UK office address to register, resulting in some residential addresses being bombarded with letters intended for businesses claiming to have an office there.
“What is happening in the UK is unconscionable,” said Graham Barrow, a financial crime investigator. “We have known for at least 20 years that UK companies are used in these scams and that we are probably the world’s largest provider of fraudulent companies.”.
The UK government has been trying to crack down on cryptocurrency companies in the region; the UK Financial Conduct Authority requires all companies conducting crypto-asset activities to register with it from January 10, 2020.
Nevertheless, The regulator has been very strict with its approvals, and many cryptocurrency-related companies continue to operate as unregistered companies as it tries to find a balance between providing a safe environment for investors and supporting innovation in the industry..
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