The UK Financial Conduct Authority (FCA) has warned investors regarding Bitfinex, which it claims is promoting financial services or products without regulatory approval.
The regulator said in the warning:
“[Bitfinex] may advertise financial services or products without our permission. You should avoid dealing with this company.”
The FCA’s warning comes with a stern warning to potential investors, stating that individuals involved with Bitfinex will not have access to the Financial Ombudsman Service for complaint resolution.
Furthermore, they are not protected by the Financial Services Compensation Scheme in the event of adverse events.
Bitfinex Answer
Bitfinex responded to the listing by saying it is “disappointed” by the FCA’s actions. In a statement seen by CryptoSlaat, it wrote:
“Over the past four months, Bitfinex has held detailed discussions with the FCA and proactively taken steps to comply with the FCA’s requirements, including issuing a notice to all its customers detailing all measures it has taken to comply with the requirements of the FCA.”
Bitfinex added that it has complied with several regulatory requirements in recent months, including restricting UK visitors’ access to website pages related to staking, affiliate programs, credit/debit cards and various ‘how to buy’ pages.
The exchange highlighted its history of working with regulators and law enforcement agencies worldwide to combat illegal activities and protect investors, and expressed disappointment that these efforts were not recognized in this case.
New rules
The FCA’s warning is part of new rules that came into force at the beginning of October. The rules mainly address three key concerns regarding the marketing of crypto assets.
The regulator believes that many promotional materials tend to emphasize the ‘safety’, ‘security’ and ‘convenience’ of using cryptocurrency services without adequately addressing the associated risks, which could potentially mislead investors.
Second, risk warnings often suffer from small fonts or non-prominent placement, making it easy for consumers to overlook critical information about the risks associated with cryptocurrency investments.
In response to these concerns, the FCA has called on companies responsible for approving financial promotions related to cryptocurrency businesses to strictly adhere to the new regulatory guidelines. The regulator added that failure to comply could lead to actions such as imposing restrictions on the offending entities.
The FCA emphasized that the new regulatory framework is not intended to hinder consumers’ access to existing assets, but rather aims to prevent risky investment activities while promoting consumer protection.
However, Bitfinex believes it is fully compliant with these new rules and has adequate risk warnings for anyone trying to create an account on its platform from Britain. The disclaimer states:
“Cryptoassets 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 manner that is fully compliant with the legal requirements of a particular jurisdiction.