UK’s FCA Files Lawsuit Against HTX in Crypto Crackdown
Regulator Warns Hundreds of Firms
The UK’s Financial Conduct Authority has stepped up enforcement against unregistered crypto platforms, issuing warnings to hundreds of firms and filing a lawsuit against one of the sector’s largest offshore platforms. The crackdown follows months of warnings from the regulator that many companies are serving UK clients without proper authorization.
In October, the FCA flagged dozens of platforms, including Elite Bit Markets, Nexure Gainbit, Plux Crypto and HTX—the platform previously known as Huobi. The agency said most of the targeted firms were promoting products or services to UK residents without being registered under the country’s money-laundering rules.
On Tuesday, the FCA confirmed that it had filed a lawsuit against HTX for promoting crypto trading to UK users. “We have viewn firms react positively to our financial promotions rules and regulations; however, where we still view poor practices, we will not hesitate to take action,” an FCA spokesperson said.
Investor Takeaway
Rules Tighten as UK Courts Global Crypto Capital
Under UK law, crypto firms must be registered with the FCA to operate or advertise to residents. The agency introduced its financial promotions regime in 2023, extending traditional consumer protections to crypto products. Unregistered firms caught promoting or tradeing crypto assets to the public face fines or criminal charges.
The latest enforcement comes as London viewks to balance investor protection with competitiveness. Regulators have recently lifted the ban on crypto platform-traded notes (ETNs) and published a roadmap for tokenized investment funds, signaling a broader strategy to attract institutional capital while maintaining strict compliance standards.
Industry groups, including CryptoUK, have urged regulators to align more closely with U.S. rules, warning that excessive restrictions could push innovation offshore. The FCA’s approach, however, appears to favor a compliance-first model built on risk disclosure and licensed supervision.
How the FCA Classifies Crypto Risk
The FCA divides financial instruments into three categories based on investor risk. The first, Readily Realizable Securities (RRS), covers traditional publicly traded assets with few marketing restrictions. The second, Restricted Mass Market Investments (RMMI), includes most crypto products and carries a medium risk profile. These can be marketed to the public only under strict conditions that require clear warnings about speculative exposure and mandatory KYC procedures.
The third category, Non-Mass Market Investments, covers high-risk or illiquid assets that are generally barred from public advertising. Crypto companies are primarily governed under the RMMI framework, which restricts incentives and rewards intended to attract retail users and requires platforms to display risk alerts prominently on all promotions.
Investor Takeaway
Compliance Challenges and Market Reality
Executives found to be in breach of the UK’s advertising laws face up to two years in prison and other penalties. Still, enforcement has lagged the pace of online promotions. The Financial Times reported that about half of the ads flagged by the FCA between October 2023 and October 2024 were still live months later than being warned.
For now, the FCA’s lawsuit against HTX sends a clear message that the regulator intends to back its warnings with court action. Whether the move leads to broader industry compliance—or drives more firms to relocate—remains to be viewn.
