U.K. authorities have launched a criminal investigation into Basis Markets, a collapsed crypto project accused of defrauding retail investors out of $28 million.
The Serious Fraud Office (SFO) said two men were arrested on Monday in London and near Bradford on suspicion of fraud and money laundering. Their identities have not been released.
According to the SFO, Basis Markets operated as an unregistered cryptocurrency scheme during the 2021 crypto boom. It promoted itself as a “crypto hedge fund” offering low-risk, arbitrage-based returns. The project raised at least $28 million through two fundraising rounds in late 2021, issuing NFTs and tokens that the SFO says were essentially worthless.
The team behind the project abruptly shut it down in June 2022, citing proposed U.S. regulatory changes. Investigators now believe investor funds were misused and siphoned into personal wallets, suggesting the project may have been an intentional “rug pull.”
The SFO carried out coordinated searches this week and is seeking information from affected investors. “We are determined to pursue anyone who would seek to use cryptocurrency to defraud investors,” SFO Director Nick Ephgrave said.
The probe comes shortly after another major crypto fraud case in the U.K., where Chinese national Zhimin Qian was sentenced to more than 11 years in prison for laundering Bitcoin tied to a $5.5 billion scheme affecting over 128,000 victims.
