Two London residents have been arrested for running an illegal cryptocurrency exchange that enabled the trading of over £1 billion of unregistered crypto assets, which was uncovered during a joint investigation with the UK financial watchdog.
Following work with the Financial Conduct Authority (FCA), the Metropolitan Police arrested two individuals, aged 38 and 44, suspected to be at the centre of the illegal exchange.
The FCA said it inspected the offices associated with the suspects and the police seized several digital devices during searches of two homes in London.
The two have since been released on bail after being interviewed under caution, with the FCA investigation ongoing.
“The FCA has an important role to play in keeping dirty money out of the UK financial system," said Therese Chambers, executive director of enforcement and market oversight at the FCA.
"These arrests show we will do everything in our power to stop crypto firms from operating illegally in the UK."
Under money laundering and terrorist financing regulations (MLRs), cryptoasset exchange providers must be registered with the FCA and comply with the UK money laundering regulations to operate legally in the UK, the regulator said.
Cryptoasset businesses need to be registered with the FCA under the MLRs, and comply with the requirements of the regulations, if they intend to provide certain cryptoasset services by way of business, and in the UK.
The MLRs enable the FCA to impose directions on crypto-asset businesses which can prohibit them from operating, and it is a criminal offence to breach a direction imposed under the rules.