In a coordinated effort, the UK's Financial Conduct Authority, in collaboration with HMRC and the South West Regional Organised Crime Unit, has conducted a series of raids on eight locations in London suspected of operating illegal peer-to-peer crypto trading platforms. The sites in question were found to be facilitating direct crypto transactions between individuals without adhering to the necessary registration requirements or implementing anti-money laundering controls, as mandated by UK law.
The FCA has issued cease-and-desist orders and collected evidence, which will be used in ongoing criminal investigations. According to the FCA, any entity operating as a crypto exchange provider must register with the authority, yet currently, there are no registered peer-to-peer crypto traders or platforms in the UK. The FCA's executive director of enforcement and market oversight, Steve Smart, emphasized that unregistered peer-to-peer crypto traders are operating illegally and pose a significant financial crime risk.
Law enforcement views this operation as a crucial step in disrupting the flow of illicit funds, with DI Ross Flay of SWROCU noting that unregistered traders can enable the movement, concealment, and expenditure of illegal funds. This enforcement action builds upon previous efforts, including the prosecution of operators of illegal crypto ATMs and the arrest of individuals linked to an unregistered crypto exchange in 2024.
The FCA also took action against an offshore platform for unlawful financial promotions and expanded its oversight of social media figures promoting high-risk crypto products last year. As the UK prepares to implement a more comprehensive regulatory framework for crypto by October 2027, with a licensing window set to open in September 2026, the current focus remains on anti-money laundering compliance and financial promotions.
The FCA is urging consumers to verify the registration status of firms using its online register and warning that dealing with unregistered P2P traders leaves users without access to the Financial Ombudsman Service or compensation schemes, exposing them to potential risks, including transactions involving stolen funds.