The UK's Serious Fraud Office (SFO) has initiated its first significant cryptocurrency investigation following the downfall of Basis Markets, a digital asset scheme that secured $28 million from investors before ceasing operations in 2022.
According to the SFO's official X account, two men have been detained on suspicion of fraud and money laundering as part of the inquiry into Basis Markets. The arrests occurred on November 20 during coordinated operations conducted in London and West Yorkshire.
Investigators executed searches at residential properties located in Herne Hill and near Bradford, with crucial support from the Metropolitan Police and West Yorkshire Police. The two individuals apprehended, one in his thirties and the other in his forties, are facing allegations related to multiple fraud and money laundering offenses.
Basis Markets conducted its operations through two distinct fundraising rounds that took place in late 2021. The scheme initially offered non-fungible tokens for sale in November 2021, followed by a second fundraiser in December 2021. The funds collected during these rounds were presented as backing for a crypto hedge fund.
In June 2022, the project abruptly announced to its investors that operations would be terminated due to anticipated changes in US regulatory frameworks. This announcement marked the beginning of significant concerns among participants who had invested substantial amounts in the venture.
Expanding Enforcement Capabilities
The SFO has revealed the allocation of specific additional funding designated for the development of crypto asset-recovery capabilities. This move signals a strategic shift in how UK authorities are approaching digital asset-related crimes.
This particular investigation signifies a departure from previous years, during which cryptocurrency fraud cases were typically handled by local police departments without the benefit of specialized resources.
Nick Ephgrave, Director of the Serious Fraud Office, underscored the agency's dedication to pursuing individuals who exploit cryptocurrency to defraud investors. He described the recent arrests as a vital step forward in the ongoing investigation and encouraged anyone possessing relevant information to come forward.
Solicitor General Ellie Reeves characterized fraud as a destructive crime that erodes business confidence and causes harm to communities. She pledged the government's full support for the SFO's endeavors to combat cryptocurrency fraud and safeguard consumers.
Investigation Details and Public Appeal
The SFO has issued a public appeal, requesting that investors who participated in Basis Markets come forward to provide information about the scheme.
The agency is particularly interested in details such as payment confirmations, the terms of participation, and any communications that took place with the project's organizers.
Individuals who possess relevant information are encouraged to contact the SFO at BasisMarkets@sfo.gov.uk. They should include their name, telephone number, and a concise description of their knowledge regarding the investment scheme.
The ongoing investigation is focusing on both the initial fundraising activities undertaken by Basis Markets and the subsequent movement of capital. Authorities are treating this case with the same level of seriousness as traditional financial fraud investigations involving comparable monetary amounts.
This development represents a significant milestone in the enforcement of UK crypto regulations. The coordinated nature of the raids and the involvement of multiple police forces clearly demonstrate the government's commitment to addressing digital asset fraud in a systematic manner.
The timing of this investigation is notable, occurring more than three years after Basis Markets ceased its operations. The considerable period between the project's collapse and the formal arrests suggests that investigators required substantial time to meticulously trace cryptocurrency transactions and compile evidence.
Both individuals who have been arrested remain in custody pending the continuation of the investigation. At this current stage, the SFO has not disclosed any formal charges, and the inquiry is proceeding through established legal channels.