The UK police and financial watchdog have arrested two individuals for operating a criminal cryptocurrency exchange that transacted cryptocurrency valued at over £1 billion ($1.26 billion). The newly busted fake crypto exchange case comes at a time when illegal activities in the digital asset space have seen criticism and scrutiny across the world.
UK FCA Busts Fake Crypto Exchange
The Financial Conduct Authority (FCA) raided the offices of two individuals in London in a fake crypto exchange case, according to local media reports. In addition to this, the Metropolitan Police confiscated many digital devices from two residential properties in the city.
The case comes at a time when the government of the United Kingdom has been working hard to pass laws about cryptocurrency by June or July. These laws will cover stablecoins, cryptocurrency staking, exchanges, and custody. Moreover, on a global scale, the FBI cautioned unregistered cryptocurrency providers stressing the significance of abiding by Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.
Crypto’s Role In Illegal Activities
The use of cryptocurrency by organized criminal groups (OCGs) to carry out illegal operations is growing in popularity. OCGs can commit money laundering and other corruption-related crimes by taking advantage of the intrinsic pseudonymity and decentralized character of cryptocurrencies. Even this week, Tether, one of the most well-known cryptocurrencies, has once more been linked to criminal activity. The well-known stablecoin backed by the US dollar is reportedly facing criticism due to its connections to terrorist organizations and human trafficking, per Bankless Times report.
Large amounts of money can be moved by criminals using cryptocurrencies rather than the official banking system, which may reduce their chance of being discovered by law enforcement or traditional financial institutions that are obligated to report suspicious transactions.
Weak AML and KYC regulations allow non-compliant cryptocurrency exchanges to be a convenient way to launder money. This is especially true when those exchanges have on- and off-ramp features that make it easier to convert cryptocurrency into fiat (money issued by the government).
To hide their source, thieves use a variety of services and tactics to route money through several addresses or companies. These assets are then moved from a purportedly authentic source to a target address or exchange to be exchanged for cash. The difficult procedure makes it very difficult to link the proceeds of money laundering to illegal activity.
