The value of U.K. cryptocurrency fraud hit a record high following the collapse of FTX.
That’s according to a recent report by law firm RPC, which found that the value of fraud during the 12 months ending March 31 of this year was at £306 million, up 41% from the prior year.
Around one-third of that figure was due to the downfall of FTX, the report said, with £115.6m reported lost to fraud in the U.K. during November 2022, the month the company went bankrupt.
“These numbers show both the impact of crypto fraud on U.K. investors and more specifically the colossal impact that the collapse of FTX had on U.K. retail investors,” Dan Wyatt, partner at RPC, said in a news release.
However, Wyatt noted that there are indications the impact of crypto fraud could be lessening, as the number and value of reports from December 2022 to March of this year fell compared to the year before. That could mean that investors have become more cautious or more educated about the risk of fraud.
“Although it may of course only indicate that there was less investment in cryptocurrencies during this period than the previous period due to the crypto winter and wider economic conditions reducing investment appetites,” he said. “Either way the value and volume of cryptocurrency fraud remains very high.”
And while fraud reports from this period are likely to include cases with direct links to FTX, RPC said they could also include reports dealing with pyramid schemes that came to light due to the quick depreciation of cryptocurrencies following FTX’s implosion.
“As in the fiat financial markets, Ponzi schemes often fall over when there is a substantial crash in asset valuations, liquidity and/or inward investment, making it impossible for the schemes to continue,” the report said.
The law firm’s findings come amid a worldwide push to regulate the cryptocurrency industry. Last week saw global securities watchdog IOSCO unveil the first international blueprint for regulating the sector.
Officials from the group (the International Organization of Securities Commissions) say they hope their blueprint leads regulators to be more direct in their approach to digital assets.
“What we would say to jurisdictions is just push ahead,” IOSCO Secretary-General Martin Moloney told the Financial Times.
“They’ve all got different legal frameworks, different regulatory frameworks. Just push ahead, do it to this standard as quickly as you can … It’s not helpful for anyone to hold back at this point.”
