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Don’t be made the fool by a Crypto King or Queen

You may have watched Netflix’s 2022 documentary film: Trust No One: The Hunt for the Crypto King or read about the Crypto Queen who allegedly defrauded investors out of $4bn through her part in the selling of a fake Cryptoasset called OneCoin, or perhaps you might have been surprised by the anti-virus software creator, John McAfee, being charged with conspiracy to commit fraud.

These are examples of high-profile instances involving investors in Cryptoassets losing millions of pounds through alleged misrepresentations and / or fraud. Despite these instances, as at 13th September 2022, a large proportion of Cryptoassets remain unregulated in the UK and are not protected by the Financial Services Compensation Scheme making them open to abuse and financial crime – although the government has recently announced a plan to make the UK a “global hub for Cryptoasset technology and investment” which is likely to lead to further regulation.

The Financial Conduct Authority (FCA) defines Cryptoassets as “cryptographically secured digital representations of value or contractual rights that use some type of distributed ledger technology (DLT) and can be transferred, stored or traded electronically”.

Crypto-currencies (such as Bitcoin and Ethereum), Stablecoins and NFTs (non-fungible tokens) are all forms of Cryptoassets.

Whilst there are only 180 currencies (such as pound sterling) recognised as legal tender in UN member states, there are thousands of Cryptoassets and, despite Cryptoassets being largely unregulated in the UK, they are heavily invested in by both sophisticated investors and the general public alike.

Notwithstanding the apparent need for further regulation of the selling of Cryptoassets in the UK, there are routes that can be explored in the event that mis-selling is suspected. For example, advertisements for Cryptoassets are monitored by the Advertising Standards Authority (whose guidance can be relied upon), and in certain circumstances, claims can be brought against individuals who hide behind limited liability companies.

There are also a range of misrepresentation claims that can be brought in the UK if you feel that you have been induced into investing in Cryptoassets as a result of something said which turns out to be untrue; such as being guaranteed a return on an investment.

At Ralli Solicitors LLP, our lawyers have regular training to ensure they are kept up to date on the latest legal issues and news, and we are therefore able to handle and, more importantly, be successful with a wide variety of complex commercial disputes. As such, we have experience in Crypto related cases having been involved with partnership disputes and misrepresentation claims.

If you’d like to speak to a lawyer about a dispute involving Cryptoassets, whether it relates to a claim being brought or intimated against you, or you think you might have been mis-sold a Cryptoasset, speak to Ewen Sharpe or Sam Pepper in our Dispute Resolution team by calling 0161 832 6131 or email enquires@ralli.co.uk.