UK Regulators Shut Down Crypto Exchange Following £1.5m Scam
GPay Limited, which traded as XtraderFX (formerly CryptoPoint) has been shut down by UK authorities following investigations into its practices.
The firm has been on the radar of the Financial Conduct Authority for over two years. But a High Court hearing, before Deputy Insolvency & Companies Court Judge Baister, finally forced it to close last week.
“This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.”
Investigators discovered that at least 108 victims had lost £1.5 million in total, as a result of using the online crypto trading platform.
The URL address www.xtraderfx.com now leads to a secure connection failed screen.
Users became suspicious when asked to submit copies of their photo ID, a utility bill, and a debit/credit card, following a withdrawal request.
While this is a standard industry practice, especially from reputable crypto exchanges with close ties to regulators, users usually deal with KYC and AML requirements on sign up.
David Hill, Chief Investigator for the Insolvency Service, said the crypto exchange operated by GPay was entirely a scam. With that, Hill stressed the importance of conducting suitable checks on any trading platform, especially when large sums of money are involved.
“We welcome the court’s decision to wind up GPay as it will protect anyone else becoming a victim. This scam should also serve as a warning to anyone who conducts trading online that they should carry out appropriate checks before they invest any money that the company is registered and regulated by the appropriate authorities.”
Scam Crypto Exchange Used Facebook to Bait Victims
The XtraderFX crypto trading platform had used social media adverts to lure rookie traders who were looking to get rich quick.
The adverts used by XtraderFX featured images and the name of Martin Lewis of moneysavingexpert.com – a consumer champion in the world of UK finance.
His TV show, The Martin Lewis Money Show, on ITV, occupies a prime time slot that offers money tips and consumer advice.
Lewis raised the issue with Facebook when he first became aware of the fraud back in 2018. But a lack of action on their part forced Lewis to launch court proceedings against the social media giant on the grounds of defamation.
Lewis claimed that over 1,000 scam adverts, featuring his image or name, had appeared on the social media platform, even after he had informed them of the problem.
The matter was settled by an agreement to withdraw legal action if Facebook donated £3 million to Citizens Advice as part of their initiative to deliver a new UK Scams Action project.
Facebook also agreed to launch a new UK specific scam reporting tool manned by a dedicated team.
With regard to XtraderFX’s forced insolvency, Lewis had mixed feelings about the ordeal. Nonetheless, he explained why he choose to sue Facebook, rather than XtraderFX directly.
“I don’t know whether to dance a jig that these despicable scum have been shut down, or cry that they managed to take so many people’s money. I’ve been fighting scam ads with my face on for four years now – sadly 1,000s have appeared. It’s always been tough to get at the actual scammers, which is why I sued Facebook to try and cut off their publicity.”
What’s more, similar to Hill’s advice, Lewis stated that scam adverts often appear on legit websites and even in broadsheet newspapers. With that, individuals need to be more skeptical.