The UK Insolvency Service has shut down a cryptocurrency trading platform after it lost £1.5m ($1.8m, €1.6m) in client funds.
GPay was wound up in the public interest in the high court on 23 June 2020, and the Official Receiver was appointed as liquidator.
The platform marketed itself as led by professional traders who enabled people with no experience to trade cryptocurrencies.
But GPay falsely claimed it received backing from entrepreneurs who starred in TV shows and a “high-profile” money saving website.
The Insolvency Service received several complaints about the firm, and it then discovered that at least 108 clients lost just under £1.5m through the trading platform.
If customers tried to withdraw funds from their accounts, they were sent a notice saying that no withdrawals could be made until they sent over a copy of their ID, a utility bill and a credit or debit card, even though such information was not required when deposits were made.
David Hill, a chief investigator for the Insolvency Service, said:”GPay persuaded customers to part with substantial sums of money to invest in cryptocurrency trading. This was nothing but a scam as GPay tricked their clients to use their online platform under false pretences and no customer has benefited as their investments have been lost.
“We welcome the court’s decision to wind-up GPay, as it will protect anyone else becoming a victim. This scam should also serve as a warning to anyone who conducts trading online that they should carry-out appropriate checks before they invest any money that the company is registered and regulated by the appropriate authorities.”
A rising trend
Low interest rates and returns have pushed significant numbers of people to seek alternative investment opportunities in the hopes of generating a better return on their money.
The Financial Conduct Authority (FCA) recently carried out research on the emergence of cryptoasset investments and found that the number of times UK consumers purchased digital assets has risen by 1.1 million since last year.
The regulator estimated that around 2.6 million people in the UK have bought cryptoassets at some point, and that nearly a million people have assets worth more than £260.
The FCA also found that the majority of investors are aware of the lack of regulation in the digital assets arena; but approximately 300,000 crypto owners believe they have protection, leaving them at risk of financial harm, the watchdog warned.
Sheldon Mills, the FCA’s interim executive director of strategy and competition, said: “This FCA report reveals the increasing popularity of cryptoassets among the UK consumer population and underlines the importance of our work to gain a deeper understanding of this market and how people interact with these assets.
“Cryptoassets present risks and opportunities for consumers and we hope these insights will help inform the policy debate in the UK and internationally as the use of these assets continue to grow.”