SFO Shatters $28M Crypto Mirage Exposing Fraudulent NFT Scheme

The UK Serious Fraud Office (SFO) has arrested two men in its first major cryptocurrency fraud investigation, targeting the collapse of Basis Markets, a scheme that raised $28 million from investors through NFTs and token sales before vanishing with the funds. The arrests, made during coordinated raids in London and West Yorkshire, mark a significant escalation in the SFO's focus on digital-asset crimes. The agency described the case as a "suspected fraudulent scheme," with investigators probing allegations of fraud, money laundering, and misappropriation of investor capital.

Basis Markets, which presented itself as a decentralized hedge fund offering "delta-neutral" yields via arbitrage strategies, launched two fundraisers in late 2021. The first, a November 2021 NFT sale, and the second, a December 2021 token offering, collectively raised $28 million. Investors were promised a share of trading profits and governance rights, but investigators found that funds were redirected to founders' personal wallets rather than a project treasury. The scheme's collapse in June 2022 -citing "proposed US regulations" as a reason - left investors with no returns and raised red flags about the team's credibility. Red flags included unverified claims of over 80 combined years of experience in finance and crypto, as well as fabricated performance dashboards.

The SFO's probe has drawn comparisons to the 2023 conviction of "Crypto Queen" Zhimin Qian, who laundered £5 billion in Bitcoin. Director Nick Ephgrave emphasized the agency's expanded crypto capabilities, stating, "We are determined to pursue anyone who would seek to use cryptocurrency to defraud investors." The SFO also highlighted its recent £8 million funding boost to enhance crypto asset recovery efforts.

Investors in Basis Markets now face a familiar risk: opaque teams promising unrealistic returns. The project's pitch materials projected a $1,880 NFT generating $18,000 monthly profits, later revised to $30,000 cumulatively - figures investigators deemed implausible. The founders' lavish spending, including luxury watches displayed in the project's Discord server, further fueled suspicions of misappropriation. One founder, Adam Cobb-Webb, was previously sanctioned by the U.S. Commodity Futures Trading Commission for spoofing oil futures trades.

The SFO has urged investors to come forward with information, signaling potential for additional arrests. With regulators worldwide intensifying scrutiny of crypto fundraising, the case could set a precedent for how authorities address high-value token sales and NFT-based schemes.