UK cracks down on crypto fraud as SFO arrests two in £21M NFT hedge-fund scandal

Key TakeawaysWhat did the SFO arrest two people for?The Serious Fraud Office arrested two individuals following the collapse of Basis Markets, a £21 million crypto scheme that raised funds through NFTs and promised algorithmic trading returns.How did Basis Markets operate?Investors purchased NFTs for “membership access” to profit-sharing pools. They were presented with fabricated dashboards that displayed high yields from automated trading strategies.The UK Serious Fraud Office [SFO] has arrested two individuals following the collapse of Basis Markets. This £21 million crypto-investment scheme raised funds through NFTs and promised algorithmic trading returns.The coordinated raids mark one of the most significant criminal investigations into an NFT-based investment product in the UK to date.Investigators say investors were lured with claims that Basis Markets used automated trading strategies. The NFT purchases granted “membership access” to profit-sharing pools.Instead, funds appear to have been diverted, mishandled, or misrepresented, prompting victims across the UK and abroad to file complaints.The SFO confirmed it carried out multiple property searches as part of the arrest operation and is now examining potential charges. The charges include fraud by false representation, conspiracy to defraud, and money laundering.NFT-powered scams now in enforcement spotlightBasis Markets operated as a hybrid model—an NFT sales engine paired with a hedge-fund-style trading pitch.Investors were shown dashboards displaying high yields, low-risk strategies, and automated trading systems. According to early findings, much of this performance data may have been fabricated.Furthermore, the case marks a rare moment where NFTs sit at the centre of a criminal prosecution. For years, NFT-based clubs, trading pools, and “membership systems” operated in a regulatory grey zone. This arrest signals that the period is ending.The SFO’s direct involvement also distinguishes the case from typical FCA enforcement, shifting the response from a regulatory breach to a potential criminal conspiracy.Crackdown builds on earlier “Crypto Queen” caseThe SFO’s actions follow another landmark UK crypto case: the conviction of Zhimin Qian, dubbed the “Crypto Queen,” who was sentenced for laundering £5 billion in Bitcoin, tied to one of the world’s largest financial crimes.Police seized 61,000 BTC, the largest cryptocurrency seizure in UK history.Qian’s case involved 128,000 defrauded investors and demonstrated how large-scale crypto laundering could be embedded into complex international networks.By contrast, the Basis Markets scandal is smaller in scale but more modern in design, relying on NFTs, algorithmic trading claims, and online community structures rather than traditional Ponzi schemes.More cases likely to emergeThe SFO hinted that Basis Markets may not be the only NFT-fund scheme under review. With crypto-market volatility rising and enforcement agencies now better equipped to track assets across chains, similar investigations may follow.Additionally, the UK now appears to be entering its most active period of crypto-crime enforcement yet, and today’s arrests are likely to be the first of many.