According to research, firms may register in the United Kingdom, making them look more trustworthy to prospective scam victims.
According to independent research, the United Kingdom is home to at least 168 organizations suspected of operating fraudulent cryptocurrency or foreign exchange (FX) schemes.
A collaborative investigation by the Bureau of Investigative Journalism and the Observer, released on January 29, discovered that organized criminal groups choose the United Kingdom as a base owing to its “loose regulation.”
The number of crypto or forex firms engaging in scams in the United Kingdom is likely far higher than 168, as the figure was determined by checking lists of suspected shell companies and cross-referencing them with allegations of fraudulent activity on multiple websites.
Half of the firms discovered were associated with so-called “pig-butchering frauds.”
A pig-butchering scam is an insidious plan in which the fraudster establishes trust with the victim — frequently via romance — before enticing them to put money or cryptocurrency into a trading platform or virtual wallet controlled by the scammer.
The fraudster then “fattens” the victim and gains their confidence before convincing them to send a significantly higher quantity, only to steal the money.
According to the research, victims were frequently solicited on social media or through dating apps like Tinder.
Furthermore, several of the victims questioned for the research stated that the firms seemed more respectable because they were situated in the United Kingdom and would not have fallen for the fraud if the organizations were based abroad.
In the United Kingdom, registering a corporation costs as low as 12 British pounds ($14.85) and requires no form of identity, making it simple for fake organizations to incorporate and establish “sham legitimacy.”
Corporations must furnish a UK office address to register, which has resulted in some residential locations being besieged with mail sent to companies claiming to have an office there.
“What has happened in the United Kingdom is abhorrent,” financial crime investigator Graham Barrow said. “We’ve known for at least 20 years that UK businesses are being used in these frauds, and we’re arguably the world’s largest source of scam firms.”
The United Kingdom government has attempted to tighten down on crypto enterprises in the region, with the Financial Conduct Authority forcing any businesses that engage in crypto asset activities to register with them by January 10, 2020.
However, the regulator has been highly rigorous in issuing licenses. As a result, many crypto-related enterprises continue to operate as unregistered businesses as it attempts to strike a balance between providing a secure environment for investors and promoting sector innovation.
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