In simple terms, cryptocurrency is a digital currency that makes use of cryptography to ensure transactions are secure. In addition to operating as a medium of exchange, some users view the purchase of cryptocurrencies as an investment, and numerous exchanges have been set up to facilitate the trade in such digital assets.

Cryptocurrency transactions are underpinned by blockchain technology, which creates a permanent and unalterable online ledger of every transaction made using the currency. Bitcoin is the first and most widely used cryptocurrency, and it is in fact possible to view every Bitcoin transaction that has taken place since its launch in 2009.

Examples of cryptocurrencies include:

  • Bitcoin

  • Ethereum

  • Ripple

  • Dash

The main criminal offences relating to cryptocurrency are fraud and money laundering. As the usage of legitimate cryptocurrency is increasing, the amount of crypto crime has in fact been reducing. In 2020, crypto crime reduced by 57% in 2020 compared to 2019.

In 2020, $3.5 billion worth of bitcoin was sent from criminally associated bitcoin addresses relating to the dark market, ransomware actors, hackers and fraudsters. This bitcoin will need to be laundered, meaning it will be included in an exchange where it can then be converted into other currency and transferred to a bank.

Action Fraud data shows that UK crypto fraud rose by a third in one year, with financial losses involving crypto hitting £226m in the year to September 2022- a 32% year-on-year increase. More than 10,000 crypto fraud reports were made this year, a 16% rise on 2021.

HMRC has made their stance very clear in relation to cryptocurrency. Using crypto is not a way for people to avoid paying tax that would ordinarily be due had the transaction be made in currency such as the British pound. VAT, income tax, corporation tax and capital gains tax will still apply. HMRC appreciates that as crypto becomes more popular, the risk of money laundering and non-compliance with HMRC’s tax regulations, as well as the FCA’s financial regulations, becomes more increased.

We have defended clients accused of numerous scams relating to cryptocurrency including;

  • romance frauds;

  • phishing;

  • mis-selling of investment schemes; or

  • theft of currency from online wallets.

Being faced with allegations of cryptocurrency related offences is a very serious matter. The potential consequences of such allegations can result in lengthy sentences of imprisonment, as well as the damage it can cause to you and the reputation of your business. Given that this is a fairly new area and the law and regulations continuously change, it is understandable that genuine mistakes may be made. This means you need a team of legal experts who understand the complex intricacies of the allegations and the law to defend you.