The FCA has started legal proceedings against global crypto exchange HTX (formerly Huobi) for illegally promoting cryptoasset services to UK consumers.

Since October 2023, all cryptoasset firms marketing to UK consumers, including firms based overseas, have been required to comply with the FCA's financial promotions regime.  The rules aim to protect consumers from unfair and misleading marketing. Advertising cryptoassets on social media or websites without complying with these rules is a criminal offence.

Since the rules came into force in October 2023, the FCA has engaged extensively with firms, and it says that the majority have reacted positively in complying with the new regime.

The FCA previously warned about HTX's illegal promotion of crypto services to UK consumers. However, HTX has continued to publish financial promotions in breach of these rules on its website and on social media platforms.

HTX operates an opaque organisational structure, hiding the identities of its owners and the operators of its website. Repeated attempts by the FCA to engage with HTX have been ignored. Since the FCA issued the proceedings, HTX has taken steps to restrict new UK customers from registering an account. However, existing UK users can still log in and access unlawful financial promotions, and HTX has given no assurance that the changes will be permanent. Therefore, the FCA remains concerned that the risk of ongoing breaches continues.

To protect consumers, the FCA has requested that social media companies block HTX's social media accounts to UK-based consumers and has requested the removal of HTX applications from the Google Play and Apple stores in the UK.

Back in 2023, the FCA wrote to firms to advise them about the new regime, and it emphasised that it would take robust action against persons illegally promoting to UK consumers. It said that "this may include, but it is not limited to, placing firms on our warning list requesting take-downs of websites, social media accounts, apps and all other promotions that are in breach, and enforcement action."

This is the first time that the FCA has taken enforcement action against a crypto firm illegally marketing their products to UK consumers. It says that it will continue to act against firms who ignore the rules.