Simply put
- Basis Markets raised $28 million in late 2021, but closed down a few months later without providing refunds.
- Authorities have arrested two individuals during raids in London and West Yorkshire.
- This situation serves as a significant test of cryptocurrency enforcement in the UK, with victims being encouraged to step forward.
U.K. prosecutors are currently looking into a failed cryptocurrency venture that attracted a substantial amount from private investors before collapsing.
The UK Serious Fraud Office (SFO) announced this investigation on Thursday. As part of this inquiry, two men have been arrested linked to Basis Markets, a defunct cryptocurrency hedge fund accused of scamming investors out of $28 million.
Police carried out search operations near Herne Hill and Bradford, seizing digital devices and documents. The identities of the suspects remain undisclosed; they are suspected of fraud and money laundering related to two fundraising events that took place from November to December 2021.
According to the SFO, Basis Markets managed to collect at least $28 million through two public fundraising initiatives. The first was an NFT member sale in November 2021, followed by a token recruitment campaign in December. The intent was to develop a “cryptocurrency hedge fund” arbitrage strategy aimed at retail investors.
“As we broaden our crypto capabilities, we are committed to vigorously pursuing those exploiting cryptocurrencies to deceive investors,” noted SFO director Nick Ephgrave in a statement.
The investigation is still underway, and the SFO is urging the public to assist with any information that could aid the case. We’ve reached out to the SFO regarding victims’ potential for compensation and if they are collaborating with other enforcement bodies.
Following the authorities’ announcement, the value of BASIS tokens plummeted nearly 40%, eventually stabilizing with a 28% drop for the day. Historical data from CoinGecko indicates the token has become nearly obsolete since an impressive sell-off on April 27, 2022, which saw $10.8 million liquidated in just one day.
By June of that year, investors were informed that upcoming US regulations had halted the project’s progression, according to the SFO.
Basis Markets had marketed itself as a “yield optimizer for directionless trading,” with claims from one founder, identified in communications as TraderSkew, or Adam, suggesting they aimed to create a decentralized liquidity pool for “limited stockholders.” He mentioned that investors would own all the assets.
This individual is reportedly Adam Cobb-Webb, a 48-year-old British national linked to a CFTC inquiry. In 2023, the commission fined Cobb-Webb $150,000 for fraudulently creating oil futures contracts while promoting Basis Markets.
Investors were lured with promises of low-risk yields using basis trading, a method that capitalizes on premiums in market-wide futures. Investigations by a group named Crypto Sleuth Investigations revealed that funds were routed directly to personal wallets controlled by an unidentified team.
The group has been contacted for further comment.
