The UK’s Serious Fraud Office (SFO) has made its first major move in crypto enforcement, arresting two men allegedly linked to the $28 million collapse of Basis Markets, a decentralized hedge fund project that disappeared with investors’ money in 2022.
Key points to remember:
- The UK’s SFO has taken its first major step in crypto enforcement by arresting two men linked to the $28 million collapse of core markets.
- Basis Markets raised over $28 million through NFTs and tokens before diverting the funds to personal wallets.
- The project delivered no products, disappeared in 2022, and left investors empty-handed.
The SFO confirmed that officers, working alongside local police, carried out coordinated raids in Herne Hill, south London, and Bradford, West Yorkshire, arresting a suspect in his 30s and another in his 40s on suspicion of fraud and money laundering.
SFO’s first major crypto investigation begins with basic markets probe
No charges have yet been filed and the SFO has described the matter as “alleged fraud”, noting that the investigation is ongoing.
However, this action marks the agency’s first large-scale crypto case.
“With our growing cryptocurrency capability and growing expertise in this area, we are determined to pursue anyone who seeks to use cryptocurrency to defraud investors,” SFO Director Nick Ephgrave QPM said in a statement.
Basis Markets launched in late 2021 with big promises. According to the findings of independent research group Crypto Sleuth Investigations, the team behind the project presented themselves as seasoned professionals with over 80 years of combined experience in finance, software development and crypto infrastructure.
They launched a decentralized hedge fund that could generate “delta neutral” returns through arbitrage strategies traditionally reserved for institutional traders.
The project sold an NFT membership collection, raising 32,000 SOL, or about $7 million at the time, and later conducted a public sale of its BASIS token, securing an additional $20.7 million in USDC.
NFT holders were promised access to profit sharing opportunities, while token buyers were told they would receive performance fees and governance rights in the future Basis Markets pool.
Despite promises that NFT and token revenue would go into a project treasury with locked team allocations, investigators found that funds were being diverted directly to the founders’ personal wallets.
No working products were delivered, although the founders posted their luxury watch purchases in the project’s Discord community.
Basis Markets had already predicted that it could reach over $1 billion in TVL within a year, and early pitch decks suggested that a single NFT, priced around $1,880, could bring in up to $18,000 per month by year three.
The team later revised that figure to a still-ambitious cumulative $30,000, but in mid-2022 the project abruptly halted operations, invoked regulatory hurdles, and disappeared, yielding nothing to investors.
UK uncovers billion-dollar cryptocurrency laundering ring
As reported, the UK’s National Crime Agency has uncovered a vast money laundering network that funneled billions in cash into cryptocurrencies to help sanctioned Russian entities evade restrictions and support the war in Ukraine.
Working with authorities in the United States, France, Spain and others, the NCA arrested 128 suspects and seized more than £25 million ($33 million) in cash and crypto in Britain as part of Operation Destabilize, the agency’s largest enforcement operation targeting money laundering pipelines into crypto.
The article UK Fraud Office Makes First Major Crypto Arrests in $28M Rug Pull Core Markets appeared first on Cryptonews.
