The Serious Fraud Office has launched its first major crypto investigation into the Basis Markets project, which allegedly defrauded investors.

The UK’s Serious Fraud Office (SFO) has made its first significant arrests in a cryptocurrency case, taking two individuals into custody over a suspected $28 million fraud involving the Basis Markets project. While no formal charges have been filed, the agency confirmed the investigation into the platform, which collapsed after raising millions from investors.

SFO Director Nick Ephgrave QPM stated the agency is determined to pursue anyone using cryptocurrency to defraud investors, highlighting its growing expertise in the sector.

Ambitious Promises and Aggressive Fundraising

Basis Markets launched in late 2021, presenting itself as a decentralized hedge fund designed to generate “delta-neutral” returns—a strategy typically reserved for institutional traders. The team claimed to have over 80 years of combined experience in finance and technology, building significant hype around the project.

The fundraising was highly successful. The project first raised 32,000 SOL (worth about $7 million at the time) by selling a collection of Non-Fungible Tokens (NFTs). A subsequent public sale of its BASIS token secured an additional $20.7 million in USDC. Investors were promised a share of profits and governance rights in the platform’s future trading pool.

From High Hopes to a Sudden Collapse

Despite assurances that all proceeds would be held in a project treasury, investigators found that the funds were allegedly diverted directly into the founders’ personal wallets. The team never delivered a functional product, even as its founders reportedly showed off luxury watch purchases in the project’s Discord channel.

The project once made bold projections, suggesting it could reach over $1 billion in Total Value Locked (TVL) within a year. An early pitch deck even claimed a single NFT, purchased for around $1,880, could yield returns of up to $18,000 per month. By mid-2022, however, the project abruptly ceased operations, citing regulatory hurdles before the team disappeared without returning any funds to its investors.