In the wake of enduring four cyber attacks within the past two months, Poloniex, backed by Justin Sun, has found itself newly added to the Financial Conduct Authority’s [FCA] warning list of unauthorized companies in the United Kingdom. The Seychelles-based exchange is one of three entities connected to entrepreneur Justin Sun that have fallen victim to these security breaches.
The FCA, on December 6, published its warning blog post to include Poloniex, emphasizing that firms and individuals lacking the necessary authorization or approval cannot promote financial services within the UK. So far, the FCA has evaluated 291 applications from cryptocurrency companies seeking registration, with only 38 receiving approval. In October, it disclosed that 140 crypto firms, including HTX and KuCoin, were on its warning list. Since then, only one entity, PayPal UK, has obtained authorization from the regulator.
Cryptocurrency companies are preparing for increased regulatory scrutiny as the UK’s financial services regulator, the FCA, implements a series of new rules to combat illicit marketing tactics in the industry. The measures, unveiled in June, involve the prohibition of refer-a-friend bonuses and the introduction of a “cooling-off” period requiring first-time investors to wait a full day before completing their transactions. This move has been characterized by analysts as an effort to provide consumers with “extra protection in the crypto Wild West.”
Justin Sun’s Exchange Hack Saga
Poloniex itself fell victim to a significant $100 million hack on November 10. The platform reported that it had largely completed its restoration efforts by the end of November and was gearing up to resume withdrawals and deposits. On December 5, the exchange reinstated deposit and withdrawal services for specific cryptocurrencies via the Tron network, outlining plans for a gradual implementation of these services for additional cryptocurrencies.
Notably, Justin Sun, the founder of Tron and owner of Poloniex, also possesses HTX, a crypto exchange formerly known as Huobi. In the past two months, platforms associated with Sun have suffered four cyberattacks. HTX experienced a loss of $8 million in a September attack and faced an additional $30 million loss due to a hot wallet breach in late November. Simultaneously, HTX’s HECO Chain Bridge, a tool facilitating the movement of digital assets between HTX and other networks like Ethereum, was compromised by hackers, resulting in the transfer of at least $86.6 million to suspicious addresses.