08 July 2021
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2 min read
International law firm Giambrone & Partners restored a client's funds to the tune of £37,000 in a complex case involving a fraudulent investment broker and two cryptocurrency trading platforms.
The client had turned to Giambrone & Partners for strategic advice when they recognised that they had been defrauded, the law firm explained in a statement.
"Our client was inexperienced in the investment markets and traded with Unix, a firm that purports to be based in Liverpool but is actually based in the Marshall Islands for regulatory purposes and is actually trading illegally.
Our client was inexperienced in the investment markets and traded with Unix, a firm that purports to be based in Liverpool but is actually based in the Marshall Islands for regulatory purposes and is actually trading illegally."
Unix is the subject of a Financial Conduct Authority (FCA) warning, stating that the firm is unauthorised and therefore does not fall under the provisions of the FCA safety net should an investor believe that they have been subject to a fraud."
The law firm's client was asked by Unix to make payments in bitcoin, in order to facilitate the payments our client opened accounts with Binance and Bitcoin UK enabling a considerable amount in funds to be transferred to the fraudulent investment broker and thereby lost to our client.
Led by Demetri Bezaintes, an associate in the banking and financial fraud litigation department, the team was able to uncover a range of breaches relating to duty-of-care and highlighted a number of serious inadequacies in their regulatory responsibilities relating to the intermediary cryptocurrency platforms, Binance and Bitcoin UK.
Bezaintes said: "The regulatory structure in place to protect novice investors was flagrantly breached by all parties. The imposition of Know Your Client (KYC) procedures is aimed at ensuring that the unwary investor that lacks the appropriate knowledge of the markets is not coerced or deceived into trading by unregulated fraudsters, ultimately resulting in the loss of their funds"
Bezaintes further said: "Binance has also been the subject of a robust FCA warning. The FCA is making renewed attempts to monitor and control cryptocurrency exchanges largely due to the ease that money laundering regulations can be breached leading to a greater preponderance of criminal activities."
The "carefully crafted legal argument, demonstrating that had the correct regulatory protocols been implemented our client would have been adequately protected, resulted in the return of £37,000 to our client".
Undertaking a thorough due diligence exercise through the regulatory bodies before actually beginning to make an investment is essential and time well spent, the law firm advised.
