Scammers exploit flaws in the British legal framework to register companies, which are later used in fraudulent schemes to steal cryptocurrency assets.
An independent investigation by the Observer, in cooperation with the Bureau of Investigative Journalism, found that there are at least 168 companies registered in the U.K. accused of running fraudulent cryptocurrency schemes.
Journalists claim that there could be many more of these companies in the United Kingdom, as the list includes those businesses whose activities have been matched with scams based on user reports. Therefore, 168 isn’t the exact number of firms registered in the country that are involved in fraudulent schemes.
Over half of them use romance scams to deceive their investors. To attract potential victims, they actively use social networks or dating apps like Tinder.
Having interviewed the victims, journalists found out that British registration of such companies looks appealing to users. Most victims even said that the registration of companies in the U.K. was the key factor in their decision to invest.
As of January 10, 2020, all businesses that plan to conduct crypto-related activities in the U.K. are required to register. However, it’s quite easy for scammers to register any company in the United Kingdom. Thus, a license to operate in the country can be obtained for just £12 (~$14.85) without confirming the company owner’s identity. The only thing necessary for registration is to provide the address of the company’s office in the United Kingdom. But even these addresses aren’t verified by the regulator. According to the Observer journalists, they managed to find a British resident who regularly receives letters meant for shell companies registered at their address.
Financial Crimes Investigator Graham Barrow called Britain “the world’s biggest provider of scam companies.” He also said that for 20 years, British companies had been involved in various fraud schemes, including those involving cryptocurrencies.
Journalists argue that the situation is unlikely to change even after the authorities’ plans to regulate the cryptocurrency sector are implemented. The thing is that the new rules are aimed primarily at regulating the sales and marketing of digital assets. And they aren’t concerned about the registration procedure of such organizations.
Recall that thanks to romance scams, fraudsters stole over $185 million in crypto in 2022, and social networks were involved in the theft of digital assets worth more than $400 million in 2021.
