UK SFO Makes Landmark Arrests in $28M NFT Fraud Case
The UK's Serious Fraud Office has detained two men in London and Bradford over an alleged $28 million fraud connected to the collapse of the Basis Markets scheme, marking the agency's first major cryptocurrency enforcement action. The November 20, 2025 operation signals a significant shift in how British authorities are approaching digital asset crime, with investigators developing specialized resources to tackle sophisticated blockchain-based fraud.
Background and Context
Basis Markets raised $28 million through two NFT-based public fundraisers in late 2021, capitalizing on the unprecedented surge in digital collectible trading that year. The first offering in November 2021 focused on NFT sales, promising investors stakes in a new crypto investment vehicle, while a December 2021 fundraiser sought to create what organizers described as a "crypto hedge fund" employing advanced trading strategies. The project collapsed abruptly in June 2022, with organizers citing "proposed US regulations" as the reason for suspension—though the timing coincided with broader crypto market downturns that year.
NFT-based fundraising emerged as a popular mechanism in 2021, with projects leveraging digital collectibles to attract capital from investors seeking exposure to the booming crypto market. However, research indicates that about 65% of NFT fraud cases involve misleading marketing, highlighting significant regulatory challenges in this emerging space.
Key Figures and Entities
According to the SFO, one man in his thirties was arrested in Herne Hill, London, while another in his forties was detained near Bradford. The operation was conducted jointly with the Metropolitan and West Yorkshire Police forces. SFO Director Nick Ephgrave confirmed the agency has developed specialized resources targeting cryptocurrency fraud, acknowledging that digital asset schemes require particular expertise to investigate effectively.
Solicitor General Ellie Reeves emphasized that such fraudulent activity poses a serious threat to the UK economy, pledging government support for enforcement actions. The SFO has called for victims and whistleblowers to contact investigators via email, suggesting authorities anticipate uncovering additional victims as the case proceeds.
Legal and Financial Mechanisms
The Basis Markets scheme allegedly used NFT sales as a fundraising mechanism that blurred lines between digital collectibles and investment securities. Investigators are examining how the $28 million raised was utilized and why investors were unable to access their funds when the project suspended operations. The case highlights challenges in applying existing financial regulations to novel blockchain-based fundraising methods, particularly when projects collapse citing regulatory uncertainty rather than operational failures.
The SFO's investigation focuses on fraud and money laundering allegations, suggesting authorities are examining whether the NFT offerings were deliberately misrepresented or whether funds were misappropriated after being raised. The complexity of tracing transactions across blockchain networks presents particular evidentiary challenges for prosecutors.
International Implications and Policy Response
The Basis Markets investigation arrives as the UK intensifies efforts against digital asset-related crime. The Crown Prosecution Service's Economic Crime Strategy 2025, published in May 2025, identified cryptocurrency and cyber-enabled fraud as high-priority threats requiring coordinated multi-agency responses. Authorities have appointed operational leads for cryptoasset recovery and established frameworks to enhance cooperation between the CPS, SFO, and law enforcement agencies.
This enforcement action aligns with global trends toward increased scrutiny of cryptocurrency fundraising methods. Regulators worldwide are grappling with how to apply securities laws to NFT offerings and other novel digital asset fundraising mechanisms. The outcome of this prosecution could establish important precedents for how UK courts approach crypto fraud cases and potentially influence international regulatory approaches to digital asset markets.
Sources
This report draws on official statements from the UK Serious Fraud Office, public announcements regarding the Crown Prosecution Service's Economic Crime Strategy 2025, and contemporary reporting on cryptocurrency enforcement trends. The SFO has requested that potential victims contact investigators at [email protected].
