Crypto promotions under fire: FCA takes High Court action against HTX as UK clampdown intensifies
Since 8 October 2023, “qualifying cryptoassets” have been in scope of the UK financial promotions regime (the Regime), aligning crypto marketing with rules for other high-risk investments. This interim regime forms part of the UK’s phased and proportionate approach to regulating cryptoassets, designed to mitigate consumer harm associated with these high-risk products. Any firm (including those overseas) targeting UK consumers must use one of four lawful routes and meet enhanced disclosure, friction and testing requirements, or risk criminal liability and enforcement action.
The FCA’s recent High Court proceedings against HTX (formerly Huobi) signals a step-change: the regulator is prepared to litigate, seek alternative service out of the jurisdiction, and pursue “persons unknown” behind opaque structures to disrupt illegal promotions.
In this article, we summarise the key rules and the consequences of non compliance, including the FCA’s recent action involving HTX.
Which cryptoasset promotions are in scope of the Regime?
A “qualifying cryptoasset” is any cryptographically secured digital representation of value or contractual rights that is transferable and fungible, excluding (i) electronic money and (ii) any instrument already treated as a ‘controlled investment’ under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the FPO). As a result, NFTs remain outside the Regime and continue to fall under Advertising Standards Authority oversight.
For the purposes of the Regime, HMT amended certain controlled activities specified in the FPO, relating to the buying and selling of investments, to specifically reference qualifying cryptoassets. Consequently, invitations or inducements relating to the following activities (each a Financial Promotion) are caught:
- Dealing in securities and contractually based investments
- Arranging deals in investments
- Managing investments
- Advising on investments
- Agreeing to carry on a regulated activity
The four lawful routes to communicate a crypto promotion
A Financial Promotion relating to qualifying cryptoassets may only be lawfully communicated in the UK where:
- it is communicated by an authorised person;
- it is communicated by an unauthorised person but approved by an authorised person;
- it is communicated by (or on behalf of) a cryptoasset business that is FCA registered for anti-money laundering purposes; or
- an exemption under the FPO applies.
Existing FPO exemptions generally apply to qualifying cryptoassets only where their scope already covers the relevant controlled investment (e.g. if a cryptoasset qualifies as a security or a derivative). Importantly, the familiar exemptions for high net worth and self certified sophisticated investors do not apply here, as they relate to a narrow list of unlisted securities.
Any promotion not issued via one of the above four routes breaches section 21 of the Financial Services and Markets Act 2000 (FSMA) (the Financial Promotion Restriction), which is a criminal offence carrying sanctions of up to two years’ imprisonment, an unlimited fine, or both.
Seven controls the FCA expects you to implement
Even if a Financial Promotion in respect of a qualifying cryptoasset has been issued legally, they must comply with the FCA’s detailed financial promotion rules for high-risk investments (the Rules). Qualifying cryptoassets are, for the purposes of the Rules, classified as Restricted Mass Market Investments. This means they can be promoted to mass market consumers, but only if firms comply with a series of enhanced safeguards:
All promotions must meet the FCA’s “fair, clear and not misleading” standard and must prominently display the required risk warning and a link to a product-specific, two-minute risk summary:
“Don’t invest unless you’re prepared to lose all the money you invest. This is a high risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.”
All non intrinsic incentives, such as referral bonuses or new joiner rewards, are prohibited.
First time investors must not be shown a Direct Offer Financial Promotion (DOFP) until at least 24 hours after requesting access. A DOFP is a Financial Promotion which specifies the manner of response or includes a form by which any response may be made.
First time investors must receive a prominent personalised risk warning before any DOFP is issued as follows:
“[Client name], this is a high-risk investment. How would you feel if you lost the money you’re about to invest? Take 2 mins to learn more.”
Before issuing a DOFP, firms must categorise the consumer as restricted, high net worth or certified sophisticated. Categorisations must be reviewed at least every 12 months.
Before processing an application made in response to a DOFP, firms must carry out an appropriateness assessment tailored to the specific cryptoasset and the consumer's knowledge and experience.
Firms must maintain detailed records of categorisation decisions and appropriateness assessment outcomes.
Common pitfalls (and how to avoid them)
- Approvals gap: assuming AML registered status equals approval rights — it doesn’t; approval must come via an authorised approver unless you are an authorised firm yourself. Build a pre publication approval gate
- One size risk summaries: using generic copy across multiple tokens. Maintain product specific risk summaries mapped to the promoted asset
- Broken positive frictions: allowing users to access a DOFP during the cooling off period. Use feature flags and audit trails to prove timing compliance
- Relying on HNW/SI exemptions: these don’t apply to qualifying cryptoassets; re design targeting logic accordingly
Enforcement spotlight: FCA v Huobi Global S.A. and Others (HTX)
The FCA has repeatedly warned that firms, including overseas platforms, must not promote cryptoassets to UK consumers unless they comply with the Regime. Through its recent action against HTX, the regulator has demonstrated a willingness to escalate to litigation where firms continue to breach the rules, despite significant challenges associated with opaque offshore structures.
On 21 October 2025, the FCA issued High Court (ChD) proceedings against Huobi Global S.A. (Panama) and multiple Persons Unknown connected to the HTX Exchange, including platform controllers, “HTX Operators”, social media promoters, and future controllers up to 31 October 2028.
The FCA’s case centres on alleged illegal financial promotions targeting UK consumers, in breach of the Financial Promotion Restriction. The FCA highlighted concerns around:
- Unapproved promotions
- Misleading marketing content
- Lack of consumer risk disclosures
- Overseas operators deliberately targeting UK users
On 4 February 2026, the Court granted permission to serve out of the jurisdiction and by alternative means, reflecting the FCA’s difficulty identifying and locating defendants. The Order of Deputy Master Dovar made clear that service would be deemed effective through methods such as electronic communication and online publication, ensuring the case could progress even where the defendants’ identities were uncertain.
In a parallel press release on 10 February 2026, the FCA stated HTX continued to publish promotions in breach of the Regime and the Rules (including on TikTok, X, Facebook, Instagram and YouTube) despite warnings; it requested app store removals and UK blocking of social accounts, and placed HTX on the Warning List. The FCA framed the case as its first enforcement action against a crypto firm for illegal marketing under the Regime.
The case demonstrates the FCA’s readiness to:
- Litigate where warnings fail
- Pursue persons unknown to capture diffuse operational roles
- Engage with Social Media platforms to remove illegal Financial Promotions
- Deploy extraterritorial service tools to reach offshore entities and promoters. Firms should assume the FCA will replicate this approach for persistent cross border breaches
This is one of the FCA’s most assertive interventions to date against a global crypto exchange. It demonstrates the regulator’s willingness to use the High Court to disrupt illegal promotions, compel cooperation, and potentially seek injunctions, compensation orders and, in serious cases, criminal sanctions.
The FCA has also reiterated that contracts entered into as a result of illegal Financial Promotions may be unenforceable against UK consumers, and that firms or intermediaries supporting unregistered cryptoasset businesses risk exposure under the Proceeds of Crime Act 2002.
Practical compliance playbook (for UK facing and overseas firms)
- Select and document your lawful route (authorised communication/approval, AML registered route, or specific FPO exemption) and embed it in your marketing workflows
- Engineer the frictions: Risk warnings, personalised pop ups, 24 hour delay and appropriateness testing should be hard coded and independently auditable
- Segment by investor category and re verify classifications at least every 12 months before issuing any DOFPs
- Build product level risk summaries and ban all non intrinsic incentives
- Maintain evidence: Approvals, versioned creatives, targeting logic, and user journey logs (timestamps, IPs, device IDs). Expect to produce these on request
- Geo fence and platform control: Ensure social channels, app stores and landing pages exclude UK targeting unless fully compliant, a key FCA focus in HTX
How we can help
The FCA’s litigation against HTX is a clear warning: the regulator will not hesitate to escalate where firms continue to market illegally to UK consumers. Building robust, evidence ready controls is now essential, not optional.
If you would like advice on whether your business is affected or wish to discuss compliance with the cryptoasset financial promotion rules, please contact Sushil Kuner, Partner & Head of Financial Services Regulation.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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