Does The Cryptocurrency Sector Finally Face Regulation? – Fin Tech

The collapse of FTX Trading Ltd. (FTX) and the subsequent arrest
of Samuel Bankman-Fried, the founder, has yet again highlighted the
significant risk that trading in cryptocurrency poses. Crypto
currency enjoys a reputation of being the “wild west” of
financial investment sector. The regulating bodies in both Europe
and the U.S.A have been murmuring about the need for regulation in
this sector for some time and the domino effect of the FTX collapse
has sharpened the need.

This comes at a time when there is about to be a change of
leadership in the Financial Conduct Authority (FCA) in the UK.
Ashley Alder, the incoming chair, has forcefully indicated that the
crypto sector will face stringent regulation that may impede the
somewhat slack attitude to accountability seen in some sections of
this unique financial sector, which is in stark contrast to the
wider financial industry that is subject to extensive regulation.
Mr. Alder will leave his current post of chief executive of Hong
Kong’s Securities & Futures Commission to assume the new
role in February 2023.

Demetri Bezaintes, an associate in the banking
and financial fraud department, commented “the FCA may face a
challenge when attempting to stringently regulate the crypto sector
to force accountability, as the Government’s declared aim is to
further expand the UK’s financial market by developing a world
leading innovative crypto hub.” Demetri pointed out that
“if and when changes to the regulatory framework for crypto
come into force and prove to be less than vigorous, it will fall to
the courts to continue to deliver verdicts that have powerful
consequences for the wrongdoer.”

Giambrone & Partners’ ground breaking
case, D’Aloia v Persons unknown [2022] EWHC 1723,
where the courts permitted the service of a world-wide freezing
order by NFT airdrop, the second such case worldwide, has also
resulted in the crypto exchanges being regarded as constructive
trustees, which imposes a heavy burden of responsibility on them.
Our lawyers have noted that the case and its innovative method of
service has further led to a summary judgment served by NFT airdrop
in the case of Jones v Persons unknown [2022] EWHC 2543
(Comm).

The lawyers in Giambrone & Partners’ banking and
financial fraud litigation departments believe that the court’s
decision to hold the exchanges accountable for the funds held in
wallets as constructive trustees is one of the most important legal
interpretations in the fight against crypto fraud, coupled with
service of legal documents by NFT airdrop which unerringly targets
the perpetrators of the alleged fraud, even if they attempt to hide
behind anonymity. Previously, the unidentified wrongdoers made
service of documents impossible, thereby preventing
accountability.

Alan Alder has acknowledged that the FCA suffers from a
reputation of failure to adequately protect consumers from
financial fraud in general and crypto fraud in particular, as well
as questions about efficiency. It remains to be seen whether he can
succeed in walking the tightrope between in making the regulatory
changes to protect individuals from fraud and mismanagement without
suppressing the legitimate crypto market.

In the meantime, Giambrone & Partners highly skilled banking
and financial fraud litigation department continues to lead the
legal battle against cryptocurrency fraudsters, developing
exceptional strategies to defeat them and reclaim our clients’
lost funds. Our lawyers have a high level of success in retrieving
both fiat money and cryptocurrency our clients’ have lost to
scam investment schemes.

Demetri Bezaintes is an associate based in the London office
within the financial services and crypto litigation department. He
is an SRA-

regulated Registered Foreign Lawyer (RFL) in England & Wales
and a qualified Greek Lawyer.(dikigoros).

Demetri has a thorough knowledge of investment fraud and fund
tracing. He works tenaciously for our clients, advising on
cryptocurrency, Forex trading disputes and regulatory
investigations. He draws his expertise in investment law from his
experience in the banking sector and his studies in banking and
financial services regulation. Before joining Giambrone &
Partners Demetri worked at an international bank, where his main
focus was the enforcement of freezing orders and third-party debt
orders.

He approaches cross-border jurisdiction matters with a
comprehensive view, based on his knowledge of both civil and common
law. After qualifying as a lawyer in Greece, he obtained a Graduate
Diploma in Law from the University of Westminster and is currently
studying for the LPC at the University of Law.