UK Financial Regulator Warns Against Poloniex
The Financial Conduct Authority (FCA) has included cryptocurrency exchange Poloniex on its warning list of firms that may not have full authorization to provide trading services in the UK. The FCA cautioned users against engaging with the company, stating that it may be promoting financial services without proper regulations. This move is part of the FCA’s efforts to protect investors following previous losses in the global market.
Firms and individuals cannot promote financial services in the UK without the necessary authorization or approval. This firm is not authorized by us and may be targeting people in the UK.
The FCA advises users to only deal with authorized firms, as they offer greater protection under the law. Users who interact with Poloniex will not have access to the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS), which means they won’t be able to recover lost assets if something goes wrong.
FCA’s Regulations in the Crypto Industry
The FCA has received over 291 applications from crypto firms seeking full compliance in the jurisdiction but has only approved 38. In October, it announced that 140 crypto firms were included in its warning list. To regulate the crypto market, the FCA has introduced new rules and guidelines for financial promotion, requiring firms to disclose risk warnings. Additionally, digital asset adverts will have a cool-off period for first-time investors, and referral bonuses will remain prohibited.
These new policies have created uncertainty in the UK market, with some analysts expressing concerns about potential limitations on user adoption. However, pro-regulation circles view these rules as a way to bring more stability to prevent future incidents that could result in significant losses.
Connection Between Poloniex and Justin Sun’s Companies
Poloniex being added to the FCA’s warning list follows a series of hacks that affected digital asset companies linked to Justin Sun. On November 10, Poloniex experienced a $100 million hack, leading to a suspension of trading activities and an internal investigation. The exchange gradually resumed services before the HECO bridge and HTX suffered breaches in November.
Justin Sun announced that the exchange would cover all losses and offered a $10 million white hat bounty to recover assets from the attackers. Some community members have raised concerns about a possible connection between these incidents.
Hot Take: The Importance of Regulatory Measures
The FCA’s decision to include Poloniex on its warning list highlights the need for regulatory measures in the crypto industry. By identifying firms that may not have proper authorization, regulators aim to protect investors from potential risks. While these regulations may create uncertainty and limitations, they also contribute to the overall stability of the market. By implementing risk disclosures, cool-off periods, and prohibiting certain practices, regulators can ensure a safer environment for investors. It is crucial for users to exercise caution when dealing with crypto firms and only engage with authorized entities to have legal protection and avenues for asset recovery if necessary.
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