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What is a Ponzi-style scheme?
A Ponzi-style scheme is a type of fraud in which money from new investors is used to pay earlier investors, rather than being generated by genuine investment activity.
This can make the scheme appear successful for a period of time, especially if early investors seem to receive returns. However, the model depends on a continued inflow of new money. Once that slows, or investors try to withdraw funds, the scheme can collapse.
In the Key Coin Assets Ltd case, the Insolvency Service said the company showed the hallmarks of a Ponzi-style scheme, with investors told their money was being invested in crypto, but no evidence of genuine trading was found.
The Insolvency Service has issued a warning following action against Key Coin Assets Ltd, an unauthorised crypto investment firm. According to GOV.UK, the company told investors it could guarantee returns of between 40% and 100%, and one online post claimed “0 Fees, 0 Risks”. Nine investors who complained to Action Fraud paid the company more than £300,000 in total.
Key Coin Assets Ltd was wound up at the High Court in London on 11 August 2026. The Insolvency Service investigation found no evidence of genuine trading and that money paid in by new investors appeared to have been used to pay off earlier investors. Funds were also reportedly moved quickly into the company’s director’s personal account, often on the same day they arrived.
In September 2024, the Financial Conduct Authority (FCA), the UK’s financial services regulator, warned about Key Coin Assets Ltd, saying the firm may have provided or promoted financial services or products without authorisation and may have targeted people in the UK.
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Crypto investment scam red flags
The Key Coin Assets Ltd warning highlights several red flags that investors should consider, such as:
- “guaranteed” high returns
- claims of no risk
- promises of quick or unrealistic profits
- pressure to invest quickly
- requests to avoid using standard payment references
- instructions not to use terms such as “crypto” or “investment” when making bank payments
- pressure to recruit other investors
- fake testimonials or professional-looking online material
- a firm not appearing on the FCA Financial Services Register
Reports to the FCA about crypto investment scams have more than doubled since 2020.
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Why checking the FCA Register matters
Before investing, people should check whether a firm is authorised or registered with the FCA and has permission to carry out the activity it is offering.
Almost all firms and individuals need FCA authorisation to carry out or promote financial services in the UK. Dealing with an unauthorised firm may mean you are not able to use the Financial Ombudsman Service or the Financial Services Compensation Scheme if something goes wrong.
The Financial Ombudsman Service (FOS) is an independent body that helps resolve disputes between consumers and financial businesses, while the Financial Services Compensation Scheme (FSCS) is a safety net that may provide compensation if an authorised financial firm fails and cannot meet claims.
Crypto can be particularly difficult for consumers because most crypto-related activities are not regulated in the UK. People investing in crypto should be prepared to lose all the money they invest.
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What should cryptocurrency investors do if they have lost money?
Anyone who believes they have been affected by a crypto investment scam should act quickly.
It is important to:
- keep bank statements and payment records
- save messages, emails, screenshots and website details
- check whether the firm appears on the FCA Warning List or the Financial Services Register
- report the matter to the FCA and Report Fraud, the UK’s national cybercrime and fraud reporting service
- contact your bank as soon as possible
- seek advice on possible recovery options
The route to recovering money depends on how the investment was introduced, how payments were made, what warnings were given, and whether any bank, adviser, introducer, or other regulated firm was involved.
Where money was transferred by bank payment, there may be questions about whether the bank should have done more to identify the risk, ask questions, or intervene before processing the payments. These cases can be fact-specific, so it is important to keep as much evidence as possible.
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TLW Solicitors’ comment
“Promises of very high returns with little or no risk should always be treated with extreme caution, especially where crypto is involved. In genuine investing, higher returns usually come with higher risk.
What concerns me in cases like this is that victims may feel there is nothing they can do once a company has been shut down, or the money has disappeared. That is not always the end of the matter, and it may be possible to review how the payments were made, whether warning signs were missed, and whether any regulated party should have done more.
The important first step is to preserve any evidence you have. Then contact our specialist financial mis-selling team for a no obligation discussion to explore your options.”
Get in touch
TLW Solicitors helps people who have lost money through investment scams, APP fraud and failed or unsuitable investment schemes.
If you or a loved one invested in a crypto scheme, transferred money after being contacted by an investment firm, or are worried that your bank should have done more to protect you, we can help you understand your position and discuss possible next steps.
