U.K.’s FCA sues Justin Sun-linked exchange for unlawful promotions

Key Takeaways

Why is the FCA suing HTX?

The U.K.’s Financial Conduct Authority is accusing Justin Sun-linked exchange HTX of promoting crypto services without proper authorization.

What does this mean for U.K. crypto rules?

The lawsuit demonstrates a welcome of regulated products, while cracking down on offshore exchanges that violate promotion laws.

The U.K.’s Financial Conduct Authority [FCA] has filed a civil lawsuit against crypto exchange HTX, formerly Huobi Global. It accused it of unlawfully marketing digital-asset services to U.K. consumers without authorization.

The case, lodged in London’s High Court, targets HTX. Also, it targets its predecessor entity Huobi Global, and four unnamed individuals connected to the exchange’s promotional operations. 

The FCA stated that the exchange breached the country’s financial promotions regime by offering crypto services without meeting requirements.

Regulator cracks down on offshore promotions

The FCA stated, according to a Financial Times report, that firms operating outside the U.K. but promoting crypto services to British consumers are still subject to the U.K.’s financial promotion rules. 

“We will not hesitate to act where firms flout the law or put UK investors at risk,” an FCA spokesperson told reporters.

HTX already appears on the FCA’s warning list, which alerts the public to firms “not authorized and likely to be operating illegally.” 

Market observers are describing the new case as a test of jurisdiction for U.K. authorities seeking to rein in global exchanges marketing to domestic users.

Justin Sun’s legal trail resurfaces

The lawsuit adds to a growing list of legal challenges linked to Justin Sun, HTX’s de facto owner and founder of the Tron Network. 

In March 2023, the U.S. SEC charged Sun and the Tron Foundation for allegedly selling unregistered securities and orchestrating wash trades in TRX and BTT.

That case remains open, although court filings indicate that both parties are exploring a potential settlement. 

Sun has also faced scrutiny over governance concerns, with reports alleging he controls the majority of TRX’s circulating supply.

The U.K. action could widen regulatory pressure on Sun-associated firms. HTX’s integration with Tron-based assets and Sun’s recent efforts to expand HTX’s global footprint have kept his empire in regulators’ crosshairs.

A shifting U.K. crypto landscape

The lawsuit comes amid sweeping regulatory changes in the U.K. Earlier this month, the U.K. lifted its ban on retail access to crypto exchange-traded products [ETPs].

This allows Bitcoin and Ethereum ETPs from firms such as BlackRock and WisdomTree to list on the London Stock Exchange.

Meanwhile, the Bank of England is preparing new stablecoin rules, signalling a broader tightening of oversight even as the country opens to institutional crypto investment.