27 February 2023
NEWS RELEASE – FOR IMMEDIATE USE
KCS Group Europe urges tighter regulation as crypto firm with links to Parliament ‘vanishes’ owing investors
US-based firm exploits UK parliamentary system to promote itself
KCS Group Europe has today issued a strong warning about the lack of regulation surrounding cryptocurrency firms.
According to newspaper reports, an investment firm with links to two all-party parliamentary groups (APPGs) has vanished owing a number of clients tens of thousands of pounds and raising questions about the role of APPGs in parliament.
Phoenix Community Capital had promoted itself online with references to its relationship with the House of Lords, APPGs and parliamentarians.
APPGs are informal groups, chaired by MPs, to discuss topical issues. In practice, they are often run by lobbyists seeking to gain influence or credibility through their links to government.
KCSGE CEO Stuart Poole-Robb says: “Investing in decentralised financial networks is a practice with no official oversight or control, in which the major players have absolute autonomy to act as they see fit and without any compulsion to act honourably or even openly.
“The fact that this company was able to exploit access within the parliamentary system itself is an indication of the need for tighter scrutiny and regulation.”
US-based Phoenix Community Capital provided £5,000 last year to the APPG on blockchain – the technology behind cryptocurrencies. The company appeared on the APPG’s website as one of its corporate ‘partners’. The group is co-chaired by Martin Docherty-Hughes, a Scottish National Party MP, who has said he had no contact with, or knowledge of, Phoenix.
It also had links to a second APPG on the Metaverse and Web 3.0, chaired by Liberal Democrat peer, Lord Timothy Clement-Jones.
Now it has emerged that the founders of Phoenix Community Capital left the company last autumn and posted a tweet advising it was under new management. Some investors claim they have lost up to $100,000.
Poole-Robb cautions that: “98% of ventures in the cryptocurrency sphere either end up in bankruptcy or reveal themselves to be scams.
“Founders exploit not only their victims, but a set of circumstances and opportunities that make crypto the prime vehicle of the day for scams. An unregulated, decentralised network whose proponents are either untraceable or unaccountable does not lend itself to confidence. And yet, driven by arrogance, over-confidence or greed, time and time again, coin offerings and crypto ventures manage to secure huge backing and, more often than not, are revealed not as cure alls, but end-alls.”
Lord Clement-Jones said he had only been asked to chair the meeting and the speaker from Phoenix Community Capital had been one of nine speakers.
“With hindsight it is regrettable he was on the panel but I am not sure what due diligence is necessary or feasible in these circumstances,” he told the Guardian.
Andrew Fulton, Executive Chairman at KCSGE, says: ”For some, cryptocurrency is a genuine innovation that is being misused. For others, it is a get-rich-quick scam preying on the wealthy, over-confident or naïve. In this instance, it is our parliamentarians who have been both used and unwittingly facilitated this apparent scam. Action needs to be taken to prevent this from happening in future.”