- The UK’s Financial Conduct Authority (FCA) has issued a consumer warning against crypto exchange FTX claiming it operates without authorization.
- The FCA has been putting together a compiled list of all digital asset companies that have registered and adhered to money laundering, terrorist financing regulations.
FTX is a centralized crypto exchange (CEX), this implies that it is a type of platform that is operated centrally by a company, so they work in a very similar way to a traditional bank or broker with the difference that digital assets are exchanged here.
In fact, A key element of this type of crypto exchange is that when users deposit their funds, they basically give up their ownership. The CEX takes custody of the crypto assets that users deposit and issues a corresponding amount of promissory notes to the merchant. Very similar to a traditional bank.
This is where the famous phrase used in the crypto ecosystem comes from: “Not your keys, not your cryptocurrencies!”
It is for this reason that users should be very vigilant when deciding to use a centralized crypto exchange since, in the end, they are giving up ownership of their assets. There is a long list of failed centralized crypto exchanges that have led to asset loss and not to mention the number of phishing platforms.
Centralized crypto exchanges must comply with the regulations of the legislations in which they operate. It is precisely in this context that the United Kingdom’s Financial Conduct Authority (FCA) has issued a caveat to the consumer against the crypto exchange FTX ensuring that it operates without authorization
In the recently released statement, the FCA states that almost all companies and individuals offering, promoting or selling financial products or services in the UK must be licensed or registered by the institution.
In order to provide consumer safety, the FCA has been developing a compiled list of all digital asset companies that have registered and adhered to money laundering, terrorist financing regulations.
In this list you can see the names of some important centralized crypto exchanges such as Gemini, Kraken, eToro, Galaxy Digital, among others. However, on FTX the FCA has issued the warning that indicates the following:
“We believe this company may be providing financial services or products in the UK without our authorisation.”
Why is it so important that a centralized crypto exchange has the permissions to operate in a territory? Well, in the case of the United Kingdom, the FCA explains that, should things go wrong, users will not be protected and consequently unlikely to get their money back.
Has FTX really been operating in the UK?
Following the publication of the warning by the FCA, a company spokesperson assured Bloomberg that a scammer might have been posing as FTX in the UK.
According to the spokesperson, the phone number listed by the FCA does not belong to FTX and this is what makes them think that it could be a scam.
Similarly, Sam Bankman-Friend, CEO of FTX, quickly took to Twitter to claim that a scammer is posing as FTX in the UK. Bankman-Friend recommends users to only use ftx.com, ftx.com/eu and ftx.us. FTX will never call you on your phone number!
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