A court in the United Kingdom has handed down stiff sentences to two crypto fraudsters found guilty of having taken money from would-be investors with promises of high returns.

A judge in Southwark Crown Court has sentenced Ross Jay and Michael Freckleton. They will serve six years and three months and six years and six months, respectively. The court had found them guilty of conspiracy to defraud for a Crypto scam operating as far back as 2015.

Crypto Fraudsters Bilked Strangers

According to a statement from the City of London police, the pair reached out to prospective investors with an offer. How would you like to invest in a cryptocurrency called “Telecoin”?

The only hitch? Telecoin did not exist, and the company under whose auspices the pair operated, Digi Ex, was a shady shell company. One with real employees, but no legitimate investment activities.

To hear the London police tell it, crypto was such a hot commodity in those heady early days that excited investors rushed to invest in Telecoin without performing any diligence.

The pair reportedly did not invest any of the more than $635,000 that they received in crypto tokens. Instead, they paid hefty salaries to themselves and Digi Ex employees.

Fraudsters Also Use Crypto ATMs

The London police interpretation of this case—that crypto caught on so fast people barely knew what they were getting into—finds support in the extremely rapid spread of Crypto Atms in Britain.

Their rise and unregulated use alarmed UK authorities so much that they have imposed strict registration requirements and undertaken widespread raids targeting crypto ATMs.

The FCA has worked with police to conduct high-profile raids on crypto ATMs in East London as well as Leeds. They mean to shut them down. Even as crypto ATMs grow more common and operate freely in other countries.

Detective Chief Inspector Lee Parish warned about companies that have not registered with the Financial Conduct Authority (FCA). Parrish said:

“The sentencing should serve as a reminder to not invest in emerging currencies that have the potential to be unstable in an erratic financial market. . . . please do your research and go with a company which is FCA registered and is recognized worldwide. If in doubt, contact an accredited financial advisor.”

The cryptocurrency markets have been an area of intensive focus for the FCA this year and in recent years. Hence, in March 2022, the organization disclosed that it had undertaken no fewer than 300 inquiries into unregistered crypto ventures during a six-month period ending in September 2021.

The FCA’s ScamSmart website received 4,300 reports of possible crypto scams during the six months in question.