U.K. authorities have opened a criminal investigation into Basis Markets, a failed crypto hedge fund accused of fleecing retail investors out of $28 million.
Summary
- Two men were arrested in London and near Bradford on suspicion of fraud and money laundering in connection with the collapse of Basis Markets.
- The SFO says the project operated as an unregistered cryptocurrency scheme that raised $28 million through NFT and token sales in late 2021.
Two men, believed to have played key roles in operating the scheme, were arrested on Monday during coordinated searches in London and near Bradford, according to a Nov. 20 announcement from the U.K. Serious Fraud Office. While the exact nature of what role these individuals played in the alleged fraud was not disclosed, police made the arrests on suspicion of multiple fraud and money laundering offences.
According to the SFO, Basis Markets was a suspected cryptocurrency scam rather than a registered company, and was active during the height of the 2021 market boom. While advertising itself to retail investors, the project described itself as a “crypto hedge fund” offering low-risk, arbitrage-based yield.
Under this guise, the operators behind the scheme managed to raise at least $28 million through two different fundraising rounds in late 2021, during which investors were handed out valueless NFTs and tokens.
However, within months after the fundraisers, the team abruptly shut down the project in June 2022, citing “proposed new US regulations” as a justification to suspend operations.
Although the U.K. is known to house a high number of dead or failed crypto projects, largely due to its stringent regulatory stance, the case of Basis Markets may have been an intentional rug pull, given the way investor funds were allegedly misused and siphoned into personal wallets.
After more than three years of silence, the SFO has now launched a full-scale investigation into the fundraisers and the collapse that followed, starting with two raids conducted earlier this week alongside local police forces.
The identities of the two men arrested have not been disclosed, but the SFO has issued a public appeal for investors to come forward with any information that might assist the investigation.
“With our expanding cryptocurrency capability and growing expertise in this area, we are determined to pursue anyone who would seek to use cryptocurrency to defraud investors. Today’s action is an important step in our investigation, and we’re urging anyone with information to come forward and support our enquiries,” said SFO Director Nick Ephgrave QPM.
As previously reported by crypto.news, the U.K. recently concluded a high-profile crypto fraud case involving Zhimin Qian, a Chinese national accused of orchestrating a multibillion-dollar scam that impacted over 128,000 people across China.
Qian, who fled to Britain after the scheme collapsed, was sentenced at London’s Southwark Crown Court to over 11 years in prison after pleading guilty to laundering a fortune in Bitcoin connected to the $5.5 billion fraud.
