Originally posted in: Mayfair Times
“What the industry is experiencing right now is euphoria. Everyone is talking about it,” Quynh Ho tells me. Head of venture investment and corporate development at the GSR Group, a global leader in crypto trading and investment with an office on Curzon Street, Ho oversees GSR’s venture investment portfolio. The firm is an active, multi-stage investor in more than 200 crypto companies and protocols within the spheres of finance and technology.
We met just before Christmas. Bitcoin, the world’s first and most popular cryptocurrency, had just surged to a record high, rising in price by more than 50 percent since Donald Trump’s electoral win. This was in no small part due to Trump’s newfound warmth towards virtual currencies—having previously called Bitcoin a scam, he spent his election campaign vowing to make the US the “crypto capital of the planet.”
Bitcoin’s dramatic resurgence has piqued the interests of British investors who come in all shapes and sizes: from crypto-curious teenagers to high-net-worth individuals working in the finance sector. According to research by the polling firm YouGov and the Financial Conduct Authority (FCA), the City watchdog, one in eight adults in the UK now own cryptocurrency, with an average holding of £1,842.
Despite its rise in value, Bitcoin and other cryptocurrencies are polarising. Stories of virtual currencies delivering lucrative returns abound. So do cautious warnings from the FCA and other organisations about the risks of investing in these volatile assets.
New regulations around cryptocurrencies are still being finalised under Prime Minister Keir Starmer, who plans to deliver the comprehensive framework proposed by the previous government.
“In the UK, the marketing of crypto products is heavily regulated by the financial promotions regime. That limits how crypto could be promoted and by whom,” explains Raphael Landesmann, a regulatory counsel at GSR. “We’ve also got an anti-money laundering financial crime regime, which applies to crypto, but we don’t yet have a full licensing regime. That’s the bit the government is going to consult on through [2025], and the industry is really clamouring to get [that] finalised.”
Based in Marylebone, crypto insurance firm M2 Recovery specialises in crypto recovery services, from investigating and tracing the proceeds of fraud to complex legal recovery processes and enforcement. The firm’s director, Louise Abbott, tells me that “since Trump was elected, crypto [investment] has gone through the roof.”
Abbott warns that the surge of interest in cryptocurrencies leaves people vulnerable to fraudsters and scams. The latter are becoming more elaborate, with criminal gangs using sophisticated marketing techniques via social media to entice investors.
“These fraudsters operate on an absolutely massive scale,” Abbott says. “You’re talking about huge warehouses, billions of crypto passing through wallets every day.”
TRM Labs, a blockchain intelligence company that detects and investigates crypto-related financial crime and fraud, found that the value of stolen crypto assets worldwide more than doubled in the first half of 2024.
Abbott has been busy fielding calls from those unlucky enough to fall for these scams. While some of her clients are “little old ladies,” others are lawyers or investment bankers. Just before we talked, she received a call from someone who had been happily investing in Bitcoin for over a year. “They said: ‘I just tried to withdraw my money, and I can’t.’”
Scammers pinpoint areas of high wealth, with Mayfair being an obvious target. “I have a client who lives in the area and a couple who work there,” Abbott tells me. “One is an entrepreneur who was [involved in] an investment scam. He’s in his 50s and had been showing interest online, looking at crypto. Another lady, who’s well known, has been targeted because she is wealthy.”
M2 offers a unique insurance policy for crypto investors who have been scammed, covering £250,000 in legal fees and disbursements. To reclaim stolen crypto assets, Abbott and her legal team obtain a freezing injunction through a court process to prevent further funds from being withdrawn illicitly. Once this is granted, Abbott works with crypto platforms to retrieve these stolen funds, which can be tracked through a blockchain ledger.
In her work recovering stolen crypto assets, Abbott has worked with the US Secret Service, the British police, and other enforcement agencies, peering into the shadowy underbelly of a new breed of globalised crypto crime networks. Strong evidence suggests these gangs or cartels have links to authoritarian regimes, acting on their behalf to help fund state activities.
“Some of them are definitely state-backed or funding warfare,” Abbott says. “Some of them you can attribute to terrorism. They’re really quite horrendous.”