The Serious Fraud Office has announced a major investigation into an alleged $28 million crypto and NFT scheme operated under the name Basis Markets. Search warrants have been executed and individuals have been questioned as part of the criminal investigation. While the SFO leads on any potential offences, the announcement has immediate civil consequences for insolvency practitioners, investors and directors involved in or connected to the scheme.
Civil action does not depend on the outcome of the criminal process. Insolvency practitioners may take steps to trace and secure missing digital assets. Investors may seek to recover losses through civil claims. And directors may face misfeasance allegations or demands for information if they were involved in decisions about crypto assets, wallets or investor funds.
This blog explains what the SFO announcement means from a civil law perspective, how both insolvency practitioners and directors should respond, and how early advice helps protect positions on all sides.
What has the SFO announced about the Basis Markets investigation and why does it matter for civil proceedings?
The Serious Fraud Office has begun investigating Basis Markets, a crypto scheme that claimed to operate an algorithmic trading and NFT investment model. In its announcement, the SFO confirmed that it had used search warrants and seized materials to understand how investor funds were handled. Although the investigation focuses on criminal wrongdoing, the civil consequences begin much sooner.
- Civil claims can proceed regardless of whether a criminal case is brought or concludes successfully.
- Where investor money has been lost, where crypto assets have moved in unexplained ways, or where companies collapse into insolvency, civil recovery can start immediately.
- This may involve urgent injunctions, asset tracing or claims against individuals involved in running the scheme.
For insolvency practitioners, the SFO’s involvement confirms that serious concerns exist. For directors or founders, it signals that questions may soon be asked about their handling of digital assets, investor funds, and disclosures made to clients. This does not mean that the directors have engaged in misconduct. But it does mean that careful, well-advised engagement is essential.
FWJ Takeaway: An SFO announcement is a red flag for civil consequences. Civil action can begin immediately, long before any criminal decisions are made. Our team at FWJ is extremely experienced in dealing with crypto related claims.
How does a major SFO crypto investigation affect insolvency practitioners trying to trace missing digital assets?
When a crypto scheme collapses or comes under investigation, insolvency practitioners often face significant difficulty obtaining information, locating wallets or understanding how funds were used. The presence of the SFO confirms that substantial sums may be missing, and this can strengthen the case for early civil action.
Insolvency practitioners can make use of their statutory powers, including:
- s.235 Insolvency Act 1986 – obliging officers to provide information
- s.236 Insolvency Act 1986 – compelling production of documents and examination
- Court applications for freezing orders to prevent dissipation of crypto assets
- Proprietary claims where identifiable crypto or fiat assets belong to the company or its creditors
- Cross-border information orders to secure access to exchanges and custodians
Where urgent action is required, freezing orders and proprietary injunctions can be essential. Crypto assets can move quickly, and securing wallets or preventing further transfers often requires immediate steps.
FWJ already publishes specialist guidance for practitioners dealing with crypto collapses, including the complexities of blockchain tracing and wallet identification.
FWJ Takeaway: For IPs, the SFO announcement signals that urgent civil steps may be needed to secure or trace crypto assets before they disappear.
What civil claims can investors or liquidators bring against directors involved in a failed or fraudulent crypto scheme?
The civil fallout from a crypto failure can be significant for directors and founders, especially where investor funds are missing or records are unclear. Investors, insolvency practitioners and new management teams may pursue claims such as:
1. Misfeasance under s.212 Insolvency Act 1986. This focuses on whether directors misapplied assets, breached their director duties or acted in a way that caused loss to the company.
2. Breach of fiduciary duty. Directors owe fiduciary duties to act in the best interests of the company, avoid conflicts and use assets properly. Crypto misuse or poor governance may trigger claims.
3. Antecedent transaction claims. Payments or transfers made before collapse may be challenged if they appear preferential or undervalued.
4. Breach of contract and misrepresentation. Investors may bring contractual claims if statements about the scheme were inaccurate or misleading.
Knowing receipt or unjust enrichment.
Where wallets or accounts controlled by directors received crypto that should have been held for investors, civil claims can arise.
These are civil claims. They do not allege criminal guilt. They require proof and can be defended with proper preparation and explanation.
FWJ Takeaway: Directors can face a range of civil claims after a crypto collapse, but each allegation is fact-specific and can be challenged with the right strategy.
How can directors protect themselves if they fear being blamed for missing or mishandled crypto assets?
It is common for directors to feel concerned when their company is linked to a crypto investigation. Many are unsure what information they must provide, how to respond to enquiries from insolvency practitioners, or whether they will automatically face personal liability. The key is to take early steps and avoid reactive decisions.
Directors should consider the following to help their situation.
- Preserving documents and records. Wallet addresses, transaction histories, exchange logs, investor communications and development notes can all help clarify how the scheme operated. they should also prepare a clear timeline. Directors who can explain key decisions and the business model are often in a stronger position.
- Avoiding informal conversations with insolvency practitioners. Misunderstandings or inaccurate wording can cause issues later. Do not respond until you have taken proper legal advice.
- Responding carefully to statutory information requests. Sections 235 and 236 requests must be taken seriously. But again – early legal advice is vital to avoid making inadvertent mistakes. These are serious applications.
- Understanding that poor record-keeping is not the same as dishonesty. Many crypto schemes suffer from weak structure rather than fraud. Context matters.
- Seeking early advice. This is the most important thing you can do. Speak to legal specialist first. It can avoid huge amounts of time, stress and expense further down the line. Our specialist team deals with these types of claims year in, year out.
FWJ Takeaway: Directors can protect themselves by acting early, responding carefully and ensuring they do not weaken their position through rushed statements. Our director defence team has nearly 25 years’ experience defending directors. We can help you too.
What civil remedies are available to recover crypto assets if a scheme collapses or funds disappear?
Crypto investigations often require rapid civil action to preserve and recover assets. The main remedies include:
1. Freezing orders.
Used to prevent transfer of crypto or fiat held in wallets or exchange accounts.
2. Proprietary injunctions.
Securing specific crypto assets believed to belong to investors or the company.
3. Tracing and recovery actions.
Using blockchain analytics to identify the movement of tokens or NFTs.
4. Bankers Trust and Norwich Pharmacal orders.
Compelling exchanges, banks or custodians to provide information about wallets or transactions.
5. Civil fraud and misrepresentation claims.
Providing a route to compensation where investors were misled.
6. Contractual claims.
Where business partners or counterparties breached obligations relating to crypto assets.
FWJ’s experience includes acting for insolvency practitioners seeking to secure crypto wallets, as well as defending directors accused of misusing them. Our understanding of both sides is often key to resolving disputes efficiently.
FWJ Takeaway: Civil remedies provide powerful tools to secure, trace and recover crypto assets and they can be pursued even while an SFO investigation continues. Whether you are an Insolvency Practitioner or a director, our team can help.
What should both insolvency practitioners and directors do now if they are affected by the Basis Markets investigation?
The SFO announcement increases scrutiny for everyone involved in or connected to a crypto scheme. The right steps depend on your role:
For insolvency practitioners:
- Secure books, records, keys and wallets as early as possible
- Consider urgent injunctions where asset flight is a risk
- Coordinate civil recovery without waiting for a criminal outcome
- Make targeted s.235 or s.236 requests
- Use blockchain analytics to support recovery claims
- Review whether misfeasance or breach of duty claims may arise
For directors or founders:
- Do not panic — an SFO investigation does not automatically imply civil wrongdoing
- Preserve all records
- Avoid informal or rushed engagement with insolvency practitioners
- Take advice before responding to information requests
- Prepare for possible civil claims relating to investor losses
- Demonstrate transparency and cooperation, but with legal guidance
FWJ’s ability to act for both insolvency practitioners and directors means we can take a balanced, practical and commercially realistic approach to disputes that arise from crypto failures.
FWJ Takeaway: Whether you are pursuing or defending civil claims, early, specialist advice is essential to protect your position in a fast-moving crypto investigation. Speak to our team as early as you can – it can help mitigate any adverse consequences.
Conclusion
The SFO investigation into Basis Markets highlights the growing scrutiny of crypto schemes, and the significant civil consequences that follow. Insolvency practitioners may need to act immediately to trace assets and secure wallets. Directors may face enquiries or claims that require careful handling. Civil action often begins long before any criminal outcome, and both parties benefit from early, specialist guidance.
If you are an insolvency practitioner tracing crypto assets or a director worried about your exposure, we can help you understand your options and protect your position.
