The Financial Conduct Authority (FCA) in the United Kingdom said it arrested two individuals who were suspected of operating an illegal crypto asset exchange. 

On June 19, the FCA said the illegal business was believed to have bought and sold more than £1 billion or $1.2 billion USD worth of unregistered crypto assets. During raids of offices associated with the suspects, the FCA seized multiple digital devices.

FCA compliance

Therese Chambers, the executive director of enforcement and market oversight at the FCA, said that the regulator plays an “important role” in keeping “dirty money out of the U.K. financial system.”

“These arrests show we will do everything in our power to stop crypto firms from operating illegally in the U.K.”

The two suspects arrested were interviewed by the FCA and subsequently released on bail, though the investigation is still ongoing.

In the U.K. crypto asset exchange operators must be registered with the FCA directly and be in compliance with money laundering regulations in order to ensure legal operations. This has been the case since January 2021.

Charlotte Tregunna, a crypto fraud expert and partner at the business crime law firm Peters & Peters, said given that these requirements for exchanges have been active for so long, it would be “difficult to persuade the FCA” of being unaware of any requirements.

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“Even more so if they had applied to the FCA previously for registration, and were one of the 86% [of exchanges] who have been rejected, and carried on regardless,” she said. 

“While this might be a case the FCA point to in the future as a successful demonstration of its ability to crack down on exchanges operating illegally, it might also be a sad indictment of the fact that regulatory clarity for market participants and service providers is still in limbo.”

Election influence

The U.K. is currently in the midst of a general election season, which will take place on July 4 of this year. 

Tregunna said that the election has “disrupted” the U.K.’s path to full crypto regulation, it should nonetheless be apparent to crypto service providers that they must be registered with the FCA.

“Whomever wins the election in July should make it a priority to steer the UK back onto the regulatory path it was previously heading towards. And they should pick up the pace while they’re at it!”

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