UK shuts crypto firm over alleged Ponzi scheme

A UK crypto investment company that promised investors returns of up to 100 per cent has been shut down after an investigation found no evidence that it carried out genuine cryptocurrency trading.

Key Coin Assets Ltd was wound up by the High Court in London on August 11 following action by the Insolvency Service.

The company had promised investors guaranteed returns of between 40 and 100 per cent. One of its online adverts even claimed, “0 Fees, 0 Risks.”

According to the Insolvency Service, nine investors lost more than £300,000 in total.

Investigators found that money from new investors appeared to have been used to pay earlier investors, a pattern they described as consistent with a “Ponzi-style” scheme.

Mark George, Chief Investigator at the Insolvency Service, said the company failed to deliver what it promised.

“Key Coin Assets Ltd promised guaranteed returns but delivered nothing. Their behaviour displayed all the hallmarks of a Ponzi-style scheme,” he said.

“Investors were told their money was being invested in crypto, but our investigation found no evidence of any genuine trading at all. Instead, funds were simply moved into the director’s personal account, often within hours of arriving,” George added.

Bank records showed that investors’ money was frequently transferred to the company director’s personal account on the same day it was received, making it difficult for investigators to trace.

The company was also accused of posting fake customer testimonials online without permission and telling investors not to use words such as “crypto” or “investment” when making bank payments.

The Insolvency Service said the instruction appeared designed to avoid scrutiny.

Investigators also found that the company failed to provide accounting records when requested and repeatedly changed its registered address. At one point, it listed a flat whose occupants said they had never heard of the company.

Companies House records claimed the company had assets worth up to £42 million, but its actual banking activity did not support the claim, according to the Insolvency Service.

The Official Receiver has been appointed as liquidator.

The Insolvency Service and the Financial Conduct Authority have urged people considering crypto investments to check whether a company is registered with the FCA.

They advised investors to be cautious of “guaranteed high returns,” companies asking them to avoid normal payment references and schemes that encourage investors to recruit others.

George also urged people to be sceptical of anyone promising high or guaranteed returns without risk.