British authorities have made their first significant arrests in a cryptocurrency fraud investigation, signaling a new era of enforcement against digital asset-related crime.
The Serious Fraud Office (SFO) arrested two men this week in connection with the collapse of Basis Markets, a project that allegedly vanished with approximately $28 million from investors. This action marks the SFO’s inaugural large-scale inquiry focused exclusively on crypto assets.
The arrests occurred during coordinated raids conducted by SFO personnel and local police in the Herne Hill district of south London and in Bradford, West Yorkshire. The two suspects, identified only as a man in his thirties and another in his forties, were detained on suspicion of fraud and money laundering.
No formal charges have been filed yet, and the investigation remains open, with authorities examining fund flows and the internal structures of the failed project.
Nick Ephgrave QPM, Director of the SFO, stated that the agency is bolstering its technical capabilities to tackle crimes involving cryptocurrencies. He affirmed that the SFO would actively pursue anyone attempting to use crypto assets to defraud investors. The SFO is the UK’s primary body for prosecuting serious fraud and corruption.
Basis Markets launched in 2021, promising to establish a decentralized hedge fund offering “delta neutral” returns through arbitrage strategies. Such operations are typically reserved for institutional investors.
The project claimed its founders possessed over 80 years of combined experience in traditional finance and software development. It raised funds through the sale of NFTs and its native token, BASIS.
NFT sales generated approximately $7 million from 32,000 SOL tokens at the time, while the public offering of the BASIS token contributed roughly $20.7 million in USDC.
Independent investigations by Crypto Sleuth Investigations revealed red flags from the outset. Contrary to promises, the funds were allegedly transferred directly to the founders’ personal wallets rather than a project treasury.
Basis Markets abruptly suspended operations in mid-2022. The team subsequently disappeared without delivering any promised products, returning funds, or providing clear explanations to investors.
Investigators noted that founders were observed on Discord displaying luxury watches acquired in the months preceding the project’s collapse, fueling suspicions of personal enrichment. The project’s treasury was reportedly insufficient to reimburse investors or fund further development.
One alleged founder, Adam Cobb Webb, also known as TraderSkew, has a prior regulatory history in the United States. The Commodity Futures Trading Commission (CFTC) found Cobb Webb engaged in “spoofing” activities in WTI oil futures contracts between December 2021 and January 2022.
In August 2023, the CFTC fined Cobb Webb $150,000 and banned him for one year from operating on CFTC-designated exchanges. This background further intensifies scrutiny of the internal practices at Basis Markets.