The UK Financial Conduct Authority (FCA) has recently announced that it has added Poloniex, a crypto exchange linked to Justin Sun, to its warning list of companies offering financial services without the necessary permissions. The FCA’s update on December 6th stated that Poloniex may be promoting financial services or products without authorization and advised individuals to avoid dealing with the firm.
Lack of Authorization
The FCA emphasized that Poloniex lacked authorization to engage with UK residents regarding its product offerings. This means that individuals involved with the company would not have access to the Financial Ombudsman Service for grievances nor would they be protected under the Financial Services Compensation Scheme. It is clear that Poloniex has been operating without the necessary regulatory approval.
Increasing Number of Unlicensed Entities
The FCA has been consistently updating its list of unlicensed cryptocurrency entities operating within its jurisdiction, and Poloniex is just the latest addition. Other well-known platforms, such as Bitfinex, HTX, KuCoin, and Phemex, have also been flagged by the FCA. To comply with the FCA’s regulations, all financial enterprises operating in the UK must either hold authorization or registration with the regulatory body.
The FCA’s warning comes at a challenging time for Poloniex. Many users have expressed frustration over their inability to withdraw their assets from the platform. This issue arose following a massive $100 million hack in November, which led to Poloniex halting deposits and withdrawal functions. While the platform has made progress in restoring services, only selected tokens are currently available for withdrawal via the Tron Network. However, Poloniex has promised to extend withdrawal services to major cryptocurrencies like BTC and ETH in the coming weeks.
Amidst Poloniex’s challenges, various cryptocurrencies are reportedly trading at a slight discount to their original value on rival platforms such as Binance. For instance, Poloniex’s BTC/USDT trading pair was observed to be trading at $43,028, whereas the same trading pair on Binance was exchanging hands for $43,229. Similarly, Poloniex’s ETH trading pair is also experiencing a discount of approximately $32 compared to that of Binance.
The addition of Poloniex to the FCA’s warning list highlights the regulatory challenges faced by unlicensed crypto exchanges. It serves as a reminder for individuals to exercise caution when dealing with such platforms. As the FCA continues to monitor and update its list, it is imperative for investors to choose regulated and authorized exchanges to ensure the safety and security of their funds.