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News/CFTC and London Police Investigate Crypto Activities

CFTC and London Police Investigate Crypto Activities

COIN360

Jul 10 2024

2 weeks ago3 minutes read

CFTC and London Police Lead Investigations into Crypto Activities 

A little over a decade ago, law enforcement and regulators had little dealings with the crypto sector; some members of either group might have never even heard of things like Bitcoin and other cryptos. Now, because cryptocurrency is so widely used, there is a greater prevalence of both crypto-related crime and more crypto-related institutions to be regulated. 

In the last year especially, several tokens have seen a boom in value and this has driven more legitimate investors and shady personalities into the space.  As Michael has written about, there are many promising crypto tokens to buy, but many token prices are still below the highs set during the last bull market. Crypto investment schemes are in abundance, and even non-crypto assets seem tempting. You can use an anonymous casino and remain private as you gamble.

This, in turn, means that law enforcement and regulators have their work cut out for them. Case in point, both the Commodities and Futures Trading Commission (CFTC) and the London Police have been in the news for their interactions with the crypto sector. 

The CTFC Investigates Jump

The CFTC has launched a probe into Jump, a Chicago-based trading firm. Jump is one of the most respected firms in the industry but has had a complicated relationship with crypto. It announced its foray into crypto in 2021 with a new arm called Jump Crypto and provided liquidity for new tokens. 

However, Jump saw a series of setbacks when its DeFi platform Wormhole suffered a hack that saw over $300 million lost to scammers. Then, it found itself down by $300 million thanks to the collapse of FTX and was also implicated in the collapse of the Terra Ecosystem in the same year. An investigation by the Department of Justice found that Jump had been involved in the backend running of the now-defunct ecosystem 

Ever since these incidents, the company has been moving away from the crypto space and noticeably didn’t file to launch its own crypto ETF despite the current market hype. Now, the CFTC is looking into its crypto trading and investment activities, though it’s unclear whether or not a lawsuit will be filed at this time. 

Crime Across the Pond

In the U.K., law enforcement also has its work full investigating crypto-related businesses. The London Metropolitan Police has announced that following an investigation with the Financial Conduct Authority (FCA), it has arrested two persons. 

The suspects are believed to have been running an illicit crypto exchange that processed over £1 billion in transactions. As part of the operation, the police conducted searches of private residences and seized computer devices while the FCA searched the offices associated with the business. 

The two suspects are currently out on bail after being questioned and official communication from the FCA suggests that the exchange was unregistered.

“More than £1 billion of unregistered crypto assets are believed to have been bought and sold through a suspected illegal crypto asset business. #FinancialCrime #cryptoassets,” said a tweet from the FCA’s official account.

In the UK, all digital asset dealers must register with the FCA or face legal repercussions. At the same time, the digital asset space is much harder to regulate than the traditional one, so some businesses fall through the cracks. However, the sheer volume of transactions processed by this exchange would make it harder to go undetected. 

The U.K. has been pursuing status as a major crypto hub for years now and this has meant that the FCA has been more proactive about both regulating the affairs of existing businesses and advising the public. Over the years, it has fined and banned various crypto ads for not following guidelines, investigated crypto crimes, and periodically puts out statements to the public. 

Consumers also need to be aware of the pitfalls when trying to invest in crypto. If you’re going to invest in cryptocurrency, there are a few things to keep in mind:

  • Proper Registration

Before you go about investing in any cryptocurrency or platform, it is important that you make sure it is duly registered. This means looking through publicly available information from the FCA or any relevant authority in your country and making sure that the platform is licensed and that the asset has not been flagged as fraudulent. 

Doing so means that you are less likely to run into trouble down the line and, in some cases, could have some protection from regulators if things go awry. If the platform you are considering isn’t registered, it is best to be cautious. 

  • Market Volatility and Risks 

Even if you are opting for a registered platform, you need to be aware of the risks associated with crypto investments. Cryptos, while profitable, are known to be highly volatile, some more than others. Also, just like with any other asset, there is the risk of losing all of your investments in the long run. 

As many regulators have advised, only invest money you are prepared to lose and keep the volatility of crypto at the forefront of your mind. Some investors are prepared to wait for years to make a profit on their investment and you need to decide whether this applies to you or not. 

  • Asset Storage and Security 

If you plan to invest in cryptos, you will need to familiarise yourself with asset storage and security. Transactions completed with crypto cannot be reversed so if you were to send your tokens to the wrong address or they are stolen, they might be near-impossible to recover. 

The good news is that there are many asset story options in the market, including custody solutions that specialize in holding crypto assets for you. If you choose to store the tokens yourself, educate yourself about the different types of crypto wallets and make sure you keep all your sensitive information safe. 

  • Scams

Just like every other industry that has to do with investments, the crypto space has scams that you have to be aware of. These include fake investment schemes, cryptojacking malware floating about, phishing schemes, and so on. To avoid losing your hard-earned money, it is best to educate yourself about these different scams and learn how to avoid them. 

In the event that you fall victim, it is important to inform law enforcement and provide as many details as you can. This increases your chances of recovering your funds and helping others. 

Conclusion 

The rise of cryptocurrency use has brought a lot of benefits for consumers but has also come with a number of challenges for both these consumers and law enforcement/regulators. From the CFTC in the United States to the police in London, the industry is under a bigger microscope than ever. 

This means that consumers need to be aware of the possible pitfalls and take precautions to protect themselves. It also means that regulators and law enforcement will constantly be on their toes to keep up with the ever-changing world of crypto and the complications that come with it. 

FAQs

  • Is Jump Crypto being sued?

Jump is under investigation by the CFTC but no lawsuit has been brought forward. 

  • Was Jump behind Terra?

Jump was named in a class-action lawsuit following the collapse of the Terra ecosystem which alleged that it helped manipulate the price of UST. 

  • Was Jump connected to FTX?

Jump had $300 million in exposure to FTX when it collapsed. 

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