• Basis Markets raised $28M in 2021 through NFTs and token sales, later collapsing by 2022.
• Two men were arrested in raids across London and West Yorkshire on fraud and money laundering charges.
• The SFO emphasizes its commitment to tackling cryptocurrency fraud amid growing concerns over digital asset misuse.

The UK’s Serious Fraud Office (SFO) is investigating Basis Markets, a failed cryptocurrency project accused of defrauding investors out of $28 million. The collapse of Basis Markets follows its brief operation after raising millions through public fundraisers in 2021. In response to the allegations, the SFO arrested two men in coordinated raids across London and West Yorkshire. These arrests mark a significant step in the growing scrutiny of the cryptocurrency sector by UK authorities.

Basis Markets Fundraiser and Collapse

Basis Markets has been able to raise a total of $28 million from retail investors via two public offzerings. In the months of November and December 2021, the firm auctioned NFT memberships and released tokens, assuring investors of profits with the help of crypto hedge fund arbitrage techniques.

The venture was met with a lot of curiosity, but by April 2022, the firm’s token had lost most of its worth, and the project was termed untrustworthy. A $10.8 million sale on April 27, 2022, led to a loss of trust among investors.

By June 2022, Basis Markets officially declared that it could no longer proceed as planned due to potential changes in U.S. regulations. The sudden collapse left many investors without refunds or an explanation of where their funds went. Authorities now suspect that funds raised by Basis Markets were diverted to personal wallets controlled by the project’s anonymous founders.

Arrests and Investigation

During the course of the inquiry, two individuals were detained by the SFO, their names not being revealed. The law enforcement carried out a search in Herne Hill and Bradford and confiscated electronic devices and papers. The two men are accused of defrauding and laundering funds from the sale of Basis Markets’ shares. The SFO has opened the door for potential victims of the fraud to step forward with details.

SFO Director Nick Ephgrave emphasized the agency’s commitment to investigating the misuse of cryptocurrency. “With our expanding cryptocurrency capability, we are determined to pursue anyone who would seek to use cryptocurrency to defraud investors,” Ephgrave stated. The investigation into Basis Markets marks another case in the increasing focus on cryptocurrency-related fraud.  

The downfall of Basis Markets and the subsequent arrests are indicative of the battle that is being fought to win back the trust of the public in the use of digital assets. As the profusion of innovations in crypto projects continues, law enforcement will find it more and more difficult to detect and prevent fraud in the sector. The SFO may well be giving out signals that it is still very much in the game of financial crimes involving cryptocurrencies.