Investors lose thousands in “Ponzi-style” crypto scheme

• Key Coin Assets Ltd promised returns up to 100%, but investors lost hundreds of thousands of pounds
• Insolvency Service investigations found no evidence of genuine trading
• The Insolvency Service and Financial Conduct Authority (FCA) are warning investors to be vigilant about similar offers

Would-be crypto investors are being warned to check firms are registered after customers lost hundreds of thousands of pounds to a “Ponzi-style” scheme.

Key Coin Assets Ltd told investors it could guarantee returns of 40% to 100%, with one online post claiming “0 Fees, 0 Risks”.

However, the Insolvency Service acted swiftly to have the company shut down when it found no evidence that any trading actually took place.

Nine investors who complained to Action Fraud paid more than £300,000 to the company between them, investigations revealed.

Key Coin Assets Ltd was wound up at the High Court in London on Tuesday 11 August.

Now, the Insolvency Service and FCA are warning others to be cautious of similar offers.

Anyone thinking of investing in crypto should check the FCA’s Firm Checker to see if the firm is registered, which means it has been through some FCA checks, and see its list of unauthorised firms to avoid.

Consumers should be wary of guaranteed high returns and think twice if a firm asks them to avoid normal payment references or pushes them to recruit others.

Mark George, Chief Investigator at the Insolvency Service, said:

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

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.

We would urge anyone considering a similar offer to check whether a firm is registered before handing over their money, and to be deeply sceptical of anyone promising guaranteed returns with no risk.

Insolvency Service investigations found that money paid in by new investors appeared to have been used by Key Coin Assets Ltd to pay off earlier ones.

Bank records showed funds were moved quickly into the personal account of the company’s director, often on the same day they arrived, and then became difficult to trace.

The company also posted fake customer testimonials online without permission, and told investors to avoid using words like “crypto” or “investment” when making bank payments, in a bid to escape scrutiny.

Accounting records were not handed over to the Insolvency Service when requested.

The company repeatedly changed its official address, including to a flat whose occupants said they had never heard of it.

Filings at Companies House also claimed assets of up to £42 million, far higher than its actual banking activity suggested.

The Official Receiver has been appointed as liquidator of Key Coin Assets Ltd.

Further information

• Key Coin Assets Ltd (company number 11621809)
• The Insolvency Service can investigate complaints about corporate abuse by live companies. This may include serious misconduct, fraud, scams or dishonest practice in the way the company operates. Further information on our live investigations can be found here
• Directors can find information about their obligations and responsibilities at the Insolvency Service’s Director Information Hub
• The FCA only regulates cryptoassets for anti-money laundering purposes and financial promotions at present. Most cryptoasset activities are not currently regulated in the UK. Cryptoasset activities will become regulated from 25 October 2027.
• Search the FCA’s warning list of unauthorised firms and find out more about how to check a firm or individual is authorised
• Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available here.

SOURCE: GOV