FCA Sues HTX in London for Illegal Crypto Promotions: What UK Exchanges Must Know

Introduction

The UK's Financial Conduct Authority (FCA) has initiated a civil lawsuit against HTX, formerly Huobi, in London's High Court. The regulator accuses the global crypto exchange of illegally promoting cryptoasset services to UK consumers without proper authorization or registration, marking a significant escalation in the FCA's efforts to enforce its new financial promotions regime for digital assets. This action serves as a clear warning to other crypto exchanges operating in the United Kingdom that non-compliance with FCA regulations will lead to stringent enforcement.

The lawsuit against HTX underscores the FCA's "zero-tolerance stance" towards unregistered overseas exchanges. The regulator has previously issued multiple consumer alerts regarding HTX's unauthorized operations and marketing practices in the UK. Under the Financial Services and Markets Act (FSMA), firms, regardless of their location, must obtain authorization or approval from a licensed entity to promote investment activities to UK consumers. Violations can result in severe penalties, including imprisonment and unlimited fines, highlighting the critical importance of crypto compliance and adherence to UK crypto advertising rules.

This legal action comes as the FCA continues to tighten its grip on the crypto market, with a notably low approval rate for firms seeking registration under the UK's Money Laundering Regulations (MLRs). The FCA reported an 87% failure rate among crypto firms applying for AML registration between April 2023 and March 2024, with only 44 out of 359 firms successfully registering since 2020. Despite industry criticism regarding rigidity, the FCA maintains that its robust standards are essential for consumer protection and preventing illicit activities, emphasizing a "same risk, same regulatory outcome" approach to crypto regulation.

Background

The UK’s Financial Conduct Authority (FCA) has launched civil proceedings in London’s High Court against HTX (formerly Huobi), alleging the global exchange unlawfully promoted cryptoasset services to UK consumers without authorization. The case underscores the regulator’s intensifying enforcement of the UK’s crypto financial promotions regime and sends a clear warning to other exchanges serving UK users from overseas.

Multiple outlets report the filing targets entities linked to Huobi Global and “persons unknown” connected to operations and promotions at the business, while noting HTX is not authorized in the UK and appears on the FCA’s warning list of firms to avoid. The FCA said the action is part of its commitment to protect consumers and ensure market integrity, and declined further comment while the case is ongoing. 

Below is a plain-English explainer of the rules at issue, why this case matters, how the UK’s crypto marketing framework works, and practical takeaways for both crypto firms and consumers.

Key points at a glance

• The FCA alleges HTX breached UK financial promotions rules by marketing crypto services to UK consumers without using a legal route to do so.

• The FCA has taken a stricter stance since 2023 on crypto marketing, requiring authorization, registration, or approval pathways for any promotions that can have an effect in the UK—even from overseas.

• The case signals “same risk, same rules” for offshore platforms and raises compliance stakes for on/off-ramp partners, e-money institutions, and banks that touch unregistered crypto firms.

What is the UK’s crypto financial promotions regime?

Under section 21 of the Financial Services and Markets Act (FSMA), a person must not, in the course of business, communicate an “invitation or inducement” to engage in investment activity unless the promotion is authorized or lawfully approved. In 2023, the UK explicitly brought certain cryptoasset promotions within this regime.

A “promotion” can be in scope if it:

• originates in the UK, or

• originates abroad but is capable of having an effect in the UK (for example, UK users can see the promotion and act on it).

That means overseas firms cannot avoid UK rules simply by being based outside the country if their marketing reaches UK consumers. The FCA details four lawful routes for crypto promotions: via an FCA-authorized firm, via an FCA-authorized “section 21 approver,” by an FCA-registered crypto firm relying on a limited exemption, or under another applicable exemption in the Financial Promotion Order. Promotions outside these routes risk criminal liability. See the FCA’s explainer for firms, examples, and expectations: (FCA guidance).

Why the FCA is focused on promotions, not just authorization

The regulator has repeatedly highlighted harm from “unfair, unclear or misleading” promotions—particularly for high-risk assets like crypto. The promotions regime is designed to ensure that retail investors see risk warnings, are properly categorized (e.g., restricted vs. high-net-worth), and are not induced by misleading claims.

The FCA has also warned that regulated partners—payment institutions, e-money firms, and FCA-registered crypto on/off-ramps—can be drawn into enforcement risk when they enable unregistered platforms to reach UK users (for example, via embedded “widget” or API flows). The agency recommends rigorous due diligence, use of section 21 approvers where applicable, geo-blocking UK users when needed, and continuous monitoring of partner promotions. See detailed expectations and case studies in.

What the HTX case signals to other exchanges

• Offshore status is not a safe harbor. If UK consumers can see and act on your promotions, UK rules likely apply.

• Expect more civil actions. The FCA has moved from warnings to litigation against a major brand, signaling readiness to seek court orders to halt promotions and set legal precedent.

• Partner risk is real. Banks, e-money firms, and payment providers can face reputational and legal risks if their services facilitate non-compliant crypto marketing flows—even indirectly via widgets.

Key terms explained

• Financial promotion: Any invitation or inducement to engage in investment activity. This includes website copy, app flows, emails, push notifications, social media posts, and affiliate marketing that encourage investment. In crypto, this often covers exchange sign-up prompts, yield claims, or product feature marketing that drives a consumer to invest.

• FSMA section 21: The core legal provision restricting financial promotions unless the communicator is authorized, an authorized approver signs off, or a valid exemption applies.

• Section 21 approver: An FCA-authorized firm with permissions to review and approve promotions by unauthorised firms. This approval carries stringent responsibilities for the approver.

• Article 73ZA exemption: A narrow exemption allowing certain FCA-registered cryptoasset firms to communicate their own non-real-time promotions they themselves prepared. It does not “bless” surrounding promotions on a partner’s site.

Practical steps for crypto firms serving UK users

• Map your UK exposure:

  • Can UK consumers see your ads, social posts, website pages, app store listings, onboarding flows, or affiliate content?

  • Are UK IPs geo-blocked where promotions are not compliant?

• Choose a lawful route:

  • Use an FCA-authorized approver for promotions, or gain FCA authorization/registration where applicable. Document your rationale and keep artifacts of approvals and controls.

• Fix the funnel, not just the ad:

  • Ensure risk warnings, categorization, and cooling-off requirements appear correctly through the entire user journey (landing pages, sign-up, deposit, trade).

• Manage partner risk:

  • Conduct due diligence on affiliates, embedded on/off-ramps, and payment providers.

  • Contractually require compliance, include takedown SLAs, and monitor their channels for UK-facing promotions.

• Prepare for scrutiny:

  • Keep change logs for marketing content, approval records, geo-block configurations, and incident response playbooks for rapid remediation.

What UK consumers should know

• Check the FCA Warning List before engaging with a platform or offer. If a firm is on the list or not authorized/registered, that’s a red flag. You may have fewer protections and limited recourse if things go wrong. See the FCA’s consumer hub and warning list via the FCA site referenced here.

• Look for proper risk disclosures, cooling-off periods, and clear categorization in the sign-up flow. Missing or rushed steps can signal non-compliance.

• Be cautious with high-yield claims, time-limited offers, and influencer content. These are commonly flagged as “inducements” in breach scenarios.

The bigger regulatory picture

The HTX filing aligns with the FCA’s “same risk, same regulatory outcome” approach as it explores fuller financial-services-style oversight for crypto companies—covering governance, operational resilience, and financial crime prevention—while calibrating obligations to the sector’s current systemic footprint. 

At the same time, the UK is selectively opening avenues for growth, such as moves affecting access to certain crypto-linked products over time. The signal is clear: liberalization will go hand-in-hand with marketing discipline and robust consumer protections.