Financial Conduct Authority warns UK investors not to engage with Bitfinex
The FCA has listed the exchange as a noncompliant entity and warned the investing public that it will have no recourse in the event of losses.
The UK’s Financial Conduct Authority (FCA) has issued a warning to investors concerning Bitfinex, which it states may be promoting financial services or products without the regulator’s authorization.
The regulator said in the warning:
“[Bitfinex] may be promoting financial services or products without our permission. You should avoid dealing with this firm.”
The FCA’s warning comes with a stern caution to potential investors, stating that individuals engaging with Bitfinex will not have access to the Financial Ombudsman Service for resolving complaints.
Additionally, they will not be protected by the Financial Services Compensation Scheme in case of adverse events.
Bitfinex responded to the listing by saying it is “disappointed” by the FCA’s actions. In a statement seen by CryptoSlate, it wrote:
“Over the past four months, Bitfinex has held detailed discussions with the FCA and has proactively taken measures to meet the FCA’s requirements, including issuing a notice to all its customers providing detail of all the measures it has taken to meet the FCA’s requirements.”
Bitfinex added that it has complied with several regulatory requirements in recent months, including restricting UK-based visitors’ access to website pages related to staking, affiliate programs, credit/debit cards, and various “how to buy” pages.
The exchange emphasized its history of cooperation with regulatory authorities and law enforcement agencies globally to combat illicit activities and protect investors, expressing disappointment that these efforts were not recognized in this case.
The FCA’s warning is part of new rules that took effect at the beginning of October. The rules primarily relate to three significant concerns regarding the marketing of crypto assets.
The regulator believes that many promotional materials tend to emphasize the “safety,” “security,” and “ease” of using cryptocurrency services without adequately addressing the associated risks, which could potentially mislead investors.
Secondly, risk warnings often suffer from small fonts or non-prominent placement, making it easy for consumers to overlook critical information concerning the risks involved in cryptocurrency investments.
In response to these concerns, the FCA called upon companies responsible for approving financial promotions related to cryptocurrency firms to adhere to the new regulatory guidelines strictly. The regulator added that failure to do so could lead to actions such as restrictions being imposed on the offending entities.
The FCA emphasized that the new regulatory framework is not intended to obstruct consumer access to existing assets but rather aims to prevent high-risk investment activities while promoting consumer protection.
However, Bitfinex believes that it is fully compliant with these new rules and has adequate risk warnings in place for anyone trying to create an account on its platform from the UK. The disclaimer states:
“Crypto assets are a high-risk product, and you are unlikely to be protected if something goes wrong.”
Bitfinex said it remains committed to providing services to customers in a way that is fully compliant with the regulatory requirements of any given jurisdiction.