FCA Moves Against HTX in London Over Illegal Crypto Promotions – Warning to Other Exchanges

The United Kingdom’s Financial Conduct Authority (FCA) has filed a lawsuit against several entities connected to the digital asset exchange HTX, formerly known as Huobi, accusing the platform of unlawfully promoting cryptoasset services to consumers in the United Kingdom.

The case, filed in London’s High Court on Tuesday, marks a rare civil action by the UK’s top financial watchdog against a major global exchange.

According to the report, HTX breached the country’s financial promotions regime by targeting UK users without proper authorization or registration.

“The FCA has commenced civil proceedings in the High Court against HTX, a global crypto exchange, for unlawfully promoting cryptoasset services to UK consumers,” the agency said in an emailed statement.

“This action is part of our commitment to protect consumers and uphold the integrity of UK financial markets.”

The regulator’s move embodies its zero-tolerance stance toward overseas exchanges operating in the UK without registration or compliance oversight.

Since the implementation of the Financial Promotions Regime, the FCA has repeatedly warned exchanges, including Binance, KuCoin, and OKX, over unauthorized marketing.

HTX’s Second Warning: FCA Lawsuit Indicates Tougher UK Stance on Crypto Ads

The FCA’s move follows multiple consumer alerts issued earlier this year, warning that HTX was operating without authorization while promoting its services to UK residents.

The exchange has previously used the Huobi brand across several jurisdictions, raising concerns about how its marketing practices cross regulatory boundaries.

Additionally, Justin Sun, who serves as an adviser to HTX and is known for his close association with the Trump family’s digital asset ventures, is not listed as a defendant. Neither Sun nor his representatives have commented publicly on the matter.

But what exactly is the law defaulted by HTX?

Under the UK’s Financial Services and Markets Act (FSMA), firms must not communicate any invitation or inducement to engage in investment activity unless the promotion is authorized or approved by a licensed entity.

This applies regardless of whether the company is based in the UK or abroad, so long as the promotion can influence UK consumers.

Violating this rule constitutes a criminal offense, carrying penalties of up to two years in prison, an unlimited fine, or both.

Regulated institutions that choose to collaborate with unregistered crypto entities risk being drawn into enforcement actions themselves, facing severe compliance and reputational repercussions.

Also, the FCA has noted that many unregistered firms attempt to reach UK customers through online promotions, including websites and apps that embed on/off-ramp services from regulated partners.

The regulator argues that this model can mislead users into believing those unregistered platforms are operating legally.

The latest legal escalation with HTX arrives as the FCA continues to tighten the gates on crypto market entry, with fewer than 100 firms given approval at the time of writing.

That figure shows the regulator’s uncompromising stance on anti-money laundering (AML) and consumer protection standards, which many overseas firms have struggled to meet.

Crypto’s Compliance Struggle: Only 44 of 359 Firms Pass FCA’s Registration Test

Britain’s financial promotions regime for cryptoassets came into force after Parliament expanded existing rules to include digital assets.

Since then, the FCA has intensified enforcement, warning that only firms registered under the UK’s Money Laundering Regulations (MLRs) or authorized under FSMA can legally promote crypto services.

The FCA has faced challenges in bringing crypto activity under supervision. Between April 2023 and March 2024, the agency reported an 87% failure rate among crypto firms seeking registration under anti-money laundering rules.

Out of 35 applications, only four received approval. Since the regime began in 2020, 44 out of 359 firms have successfully registered.

Critics within the industry have accused the FCA of excessive rigidity, while the agency argues that its standards are necessary to prevent misuse of digital assets for illicit activities and to protect investors from misleading promotions.

Regulator Doubles Down on “Same Risk, Same Rules” as Crypto Industry Pushes Back on “Rigidity”

The UK’s Financial Conduct Authority (FCA) is reinforcing its message that the crypto industry will no longer operate outside the traditional financial rulebook.

The regulator recently opened consultations on applying full financial services-style regulation to crypto firms, including new requirements on governance, operational resilience, and financial crime prevention.

The guiding principle, the FCA said, is “same risk, same regulatory outcome.”

In its consultation paper, the FCA suggested crypto companies could face obligations similar to those applied to consumer credit providers, rather than banks, reflecting their smaller systemic risk.

The proposals also explore whether the FCA’s Consumer Duty, which requires firms to ensure good outcomes for customers, should extend to the crypto sector.

Despite this, the crypto industry reacted cautiously, accusing the regulator of rigidity and overreach. Several industry associations and exchange operators have warned that the FCA’s approach could stifle innovation and push startups offshore.

Their frustration has been amplified by implementation delays and prolonged approval timelines, which many firms say create regulatory uncertainty.

Despite the criticism, the FCA’s stance has remained consistent. Officials argue that crypto’s growing retail adoption and institutional interest justify a mature, rules-based framework, not a light-touch regime.

The regulator’s broader strategy reflects the UK’s dual-track approach: encouraging market growth through selective liberalization, such as the August decision to lift the four-year ban on crypto exchange-traded notes (ETNs).

The post FCA Moves Against HTX in London Over Illegal Crypto Promotions – Warning to Other Exchanges appeared first on Cryptonews.