Begun, the clone wars have – at least in the UK. A recent spate of cryptocurrency-related ‘clone firms’ has prompted UK regulatory agency the Financial Conduct Authority (FCA) to issue a string of warnings to alert investors.
What is a ‘Clone Firm’?
In order to sell, promote, or advise on the sale of share and other investment products – including cryptocurrencies – in the UK, a business has to be authorized by the FCA. A ‘clone firm’ is a business or individual that uses the name and details of an FCA-authorized firm in order to convince people of their legitimacy.
So how do ‘clone firms’ work?
It varies from scam to scam, but generally speaking they:
- Use the name of an FCA-authorized firm, either claiming to be the firm itself or a subsidiary
- Use some or all of the authorized firm’s details (e.g. address, information about key employees, etc…)
- May use their own details and claim that their contact details the in FCA Register are out of date (hint: the FCA updates the Register daily)
- May claim to be from authorized overseas firms that appear in the Register as these companies do not always provide their full details
- May use the authorized firm’s logo and branding on their own website (or in some cases copy the entire website altogether)
This Month’s Rogues’ Gallery (So Far)
This month alone, the FCA has issued 10 ‘clone firm’ warnings, several of which were about cryptocurrency related businesses.
Anton Falk Capital Partners
This company claims to be a “wealth management company” offering stock market and cryptocurrency investment services. They are using the name of a registered insurance company – Anton Falk – based in Austria. To further bolster the ruse, they use the legitimate company’s actual address as one of their three office locations – their Compliance office, no less – around the world.
This crypto exchange can’t seem to make up its mind who it is. While the FCA reports Good Crypto as being a clone of Arup Corporate Finance Ltd (that company’s full contact information is available sitewide in the footer), their terms of service page identifies them as SYSTEM TECH 5 LTD.
Fair Oaks Crypto
Another crypto exchange, Fair Oaks Crypto is a clone of Fair Oaks Capital. While the exchange lists what is supposedly their own address in the footer of their website, the phone number shown is from a location somewhere in France. On their contact page, however, they list a completely different address that just happens to be the previous address of Fair Oaks Capital.
How to Protect Yourself from Crypto ‘Clone Firms’
The FCA recommends several steps you can take if you’re considering doing business with any crypto-related business claiming to be FCA-authorized:
- Search the FCA Register for the company’s information
- Ask for their FRN number and contact details – and then call them back at the number listed in the Register
- Look for contact detail discrepancies on their website
- Look up and compare company information at Companies House
Also, be sure that you always access the FCA Register and Companies House directly (e.g. via a bookmark or by typing in the URL). Never rely on a link that the company sends you.
Do you think that the UK’s ‘clone firms’ problem is going to continue to get worse? Would passing workable regulations and allowing crypto companies to register curb the problem? Let us know in the comments below.
Images courtesy of Shutterstock, FT.com