FCA Takes Legal Action Against HTX Over UK Crypto Marketing Breaches

The Financial Conduct Authority announced on Tuesday that it had begun legal proceedings against crypto exchange HTX, formerly known as Huobi, for “illegally promoting crypto asset services to UK consumers.” This marks the first time the regulator has taken such enforcement action against a crypto firm for marketing violations. The proceedings are based on rules enacted in October 2023 that mandate all crypto service providers comply with measures designed to protect consumers from “unfair and misleading marketing.”

The FCA stated it had previously warned HTX about its advertising practices in the UK but received no meaningful engagement. “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,” the regulator declared. Despite HTX taking steps to restrict new UK customer registrations following the legal proceedings, the FCA remains concerned because existing UK users can still access what it deems unlawful financial promotions, and HTX has provided no assurance these changes will be permanent.

The regulatory action has already produced tangible results. HTX’s Facebook page is no longer accessible in the UK, displaying a message stating, “Content not available in United Kingdom. This is because we complied with a legal request to restrict this content.” Its Instagram and TikTok pages are similarly blocked, though its X and YouTube accounts remain accessible at the time of the announcement. HTX did not respond to requests for comment regarding the proceedings.

This enforcement occurs as the FCA is actively “shoring up its crypto provisions.” Following a Treasury proposal in December to extend the FCA’s remit beyond its current focus on anti-money laundering (AML) rules, the regulator is now consulting on new rules covering consumer duty, conduct, and oversight for crypto firms. The goal is to bring crypto regulation more in line with traditional finance, with a full regulatory regime slated for launch in 2027. Applications for licensing under this new framework are expected to open later this year.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, emphasized that the advertising rules were “designed to support a sustainable and competitive crypto market in the UK, ensuring that consumers have what they need to make informed decisions.” He stated, “HTX’s conduct stands in stark contrast to the majority of firms working to comply with the FCA’s regime,” and warned the regulator would “continue to act against firms who ignore our rules.”

This contrast is evident in the recent actions of other major crypto entities. Just this week, Blockchain.com secured FCA registration in the UK, following Ripple, which obtained its registration in January. A Blockchain.com spokesperson highlighted the significance, noting that securing registration “puts us under active oversight immediately” and means the firm is “now operating under the same rigorous standards as traditional finance and banks in the UK.” Over recent weeks, several other firms have been granted licenses bringing them under the scope of the FCA’s AML regulations, demonstrating a pathway to compliance that HTX allegedly avoided.