The amount of cash lost by UK investors following the collapse of crypto exchange FTX swelled to nearly £2m as burnt traders turned to the police in the hope of recovering their money, City A.M. can exclusively reveal.
A freedom of information (FOI) request revealed that City of London police were talking to 32 people who lost £1.9m after the collapse of Sam Bankman-Fried’s Bahamas-based exchange, which imploded in early November amid a rush by customers to withdraw cash from the platform.
The FOI request by trading website Investing Reviews showed how one UK-based trader spoken to by police lost over £1m in the firm’s collapse. Police said the youngest victim was a teenager, while the oldest was in their seventies.
Bankman-Fried is facing wire fraud charges in the US over the alleged use of customers’ money to fund his sister trading outfit Alameda Research. Two of his top lieutenants – Alameda Chief Caroline Ellison and FTX co-founder Gary Wang – have already pleaded guilty to wire fraud.
Insolvency teams overseeing the winding up of FTX have reportedly recovered over $5bn in assets but the full scale of consumer losses are not yet clear.
The chief of Investing Reviews Simon Jones said the losses so far reported by UK customers are likely to “just be the tip of the iceberg.”
“The Financial Conduct Authority has been at pains to warn investors about the dangers of cryptocurrency, so if you’re tempted, make sure you don’t put all your eggs in one basket,” Jones warned.
The watchdog has repeatedly warned consumers that they should “be prepared to lose all their money” when backing digital assets
Crypto firms are currently only regulated on money laundering grounds by the Financial Conduct Authority, but the collapse of FTX has sent shockwaves through the sector and sparked calls for faster regulation in the UK. Ministers have moved recently to grant powers to regulators to clamp down on the sector and draw up a full regulatory framework of crypto assets in the UK.
City Minister Andrew Griffith said in January that regulation for digital currencies was unlikely to be ready in 2023, but reaffirmed the government’s aim to be “the home of well-regulated [and] technologically-advanced financial systems”.