'Ponzi-Style' Crypto Scheme Promised Up to 100% Returns With '0 Fees, 0 Risks': Investors Lost £300K

A crypto investment company that promised returns of up to 100% and advertised '0 Fees, 0 Risks' has been shut down after investors lost more than £300,000 to a 'Ponzi-style' scheme, according to an investigation by the UK Insolvency Service.

Key Coin Assets was wound up at the High Court in London on Tuesday after investigators found no evidence that the company carried out genuine cryptocurrency trading. Nine investors who reported losses to Action Fraud had collectively paid more than £300,000 into the business.

The case has prompted a fresh warning from the Insolvency Service and the Financial Conduct Authority (FCA) about crypto investment scams and firms offering unusually high or supposedly guaranteed returns.

Crypto Scheme Uses Investor Money to Pay Early Investors

Key Coin Assets Ltd presented itself as a cryptocurrency investment business, telling potential investors they could receive guaranteed returns ranging from 40% to 100%.

One online advertisement reportedly used the slogan '0 Fees, 0 Risks' — a combination that investigators say should have raised serious concerns.

The Insolvency Service found no evidence that investors' money was being used for legitimate cryptocurrency trading. Instead, investigators found that money from new investors appeared to have been used to pay earlier investors.

Mark George, chief investigator at the Insolvency Service, said the company promised guaranteed returns but 'delivered nothing,' adding that its behaviour displayed the hallmarks of a Ponzi-style operation.

Bank records examined during the investigation showed that money paid into Key Coin Assets was frequently transferred to the company director's personal bank account, often within hours of arriving. Once transferred, the money became difficult for investigators to trace.

The company also allegedly instructed investors to avoid words such as 'crypto' or 'investment' when making bank payments. Such instructions can be a major flag because legitimate investment businesses should not normally need customers to disguise the purpose of payments.

Investigators also discovered that Key Coin Assets had published fake customer testimonials online without permission. The company even repeatedly changed its registered address, including an apartment where occupants told investigators they had never heard of the business.

Companies House Filings Raised Questions

The investigation also uncovered a significant discrepancy between the company's claimed assets and its apparent banking activity.

Filings at Companies House reportedly stated that Key Coin Assets had assets worth around £42 million. However, investigators said the company's actual banking activity did not support those figures.

The company also failed to provide accounting records requested by the Insolvency Service. The Official Receiver has now been appointed as liquidator of Key Coin Assets.

FCA Urges Crypto Investors to Verify Firms

The case highlights why investors should be extremely cautious about cryptocurrency opportunities promising guaranteed profits.

The FCA advises consumers to use its Firm Checker tool before engaging with an investment business. Potential investors should verify whether a company is authorised or registered, as well as check the FCA's warning list of unauthorised firms.

High returns accompanied by claims of little or no risk should be treated with particular suspicion. Pressure to recruit additional investors, unusual payment instructions, or requests to transfer money to personal accounts are also potential signals that the company could be involved in fraudulent schemes.