UK Fraud Office Launches Crypto Fund Investigation
The UK Serious Fraud Office (SFO) has launched a major investigation into Basis Markets, a collapsed cryptocurrency hedge fund that allegedly defrauded investors of $28 million. The probe represents one of the UK’s most significant crypto enforcement actions to date, signaling increased regulatory scrutiny of digital asset projects.
Arrests and Asset Seizures in London and West Yorkshire
In coordinated raids across London and West Yorkshire, SFO officials arrested two men suspected of fraud and money laundering. Authorities executed search warrants in Herne Hill and near Bradford, seizing digital devices and financial documents as part of their ongoing investigation.
Fundraising Timeline and Alleged Misappropriation
According to the SFO, Basis Markets raised approximately $28 million through two public fundraising rounds between November and December 2021. The first round involved an NFT membership sale in November, followed by a token offering in December. Funds were purportedly intended for crypto hedge fund arbitrage strategies but were allegedly misappropriated.
Token Collapse and Investor Impact
Following the announcement of the investigation, the BASIS token plummeted nearly 40% before settling at a 28% daily loss. Historical data from CoinGecko shows the token effectively became worthless after April 27, 2022, when $10.8 million was dumped in a single day, devastating retail investors.
Project Background and Regulatory Context
Basis Markets marketed itself as a “yield optimizer for directionless trading” and promised low-risk returns through basis trading strategies. However, by June 2022, investors were informed that proposed US regulations prevented the project from proceeding as planned.
Key Figures and Previous Regulatory Issues
The investigation has identified Adam Cobb-Webb, a 48-year-old UK national, as one of the founders operating under the pseudonym “TraderSkew.” Notably, the CFTC previously fined Cobb-Webb $150,000 in 2023 for spoofing oil futures contracts during the same period he promoted Basis Markets.
Victim Outreach and Legal Proceedings
The SFO has publicly urged victims to come forward with any information that could assist the investigation. This case represents a critical test of the UK’s ability to enforce cryptocurrency regulations and protect investors from fraudulent schemes in the rapidly evolving digital asset space.
Implications for Crypto Regulation and Enforcement
SFO Director Nick Ephgrave emphasized the agency’s commitment to combating crypto fraud, stating: “With our expanding cryptocurrency capability, we are determined to pursue anyone who would seek to use cryptocurrency to defraud investors.” The case highlights growing international coordination among regulatory bodies addressing cryptocurrency misconduct.
