Two individuals have been arrested on suspicion of running an illegal cryptoasset exchange, through which more than £1bn of unregistered digital assets are believed to have been bought and sold.
The Financial Conduct Authority (FCA) said it conducted an operation with the Metropolitan Police Service to arrest the unnamed people, aged 38 and 44.
The FCA said it inspected offices associated with the suspects, while police seized several digital devices during searches of two residential London properties.
Both suspects were interviewed under caution by the FCA and released on bail, the regulator added. Its investigation into the case remains ongoing.
Therese Chambers, the FCA’s executive director of enforcement and market oversight, said: “The FCA has an important role to play in keeping dirty money out of the UK financial system. These arrests show we will do everything in our power to stop crypto firms from operating illegally in the UK.”
While cryptoassets themselves are generally unregulated in the UK, cryptoasset exchange providers must be registered with the FCA and comply with the UK money laundering regulations to legally operate in the country.
Latest official figures show the vast majority of crypto firms still fail to gain FCA approval of their anti-money laundering and counter-terrorist financing controls under regulations introduced by the government in 2017.
Since it began supervising the process in January 2020, the FCA has received 347 applications for registration. However, just 47 (14 per cent) of these applications have resulted in the firm registering with the FCA.
The regulator has also seen a drop-off in the number of applications, with only 29 over the 12 months to the start of June.