Cryptocurrency exchange CEX.IO and its promotional partner Gateway 21 have come under fire following a series of whistleblower emails revealing systemic corruption, asset mismanagement, and deliberate regulatory non-compliance.
The evidence, presented directly to Nikhil Rathi, CEO of the UK Financial Conduct Authority (FCA), has yet to receive a formal response, leaving many questioning the effectiveness of regulatory oversight in the crypto sector.
Background on CEX.IO
Founded in 2013, CEX.IO positioned itself as a leading cryptocurrency exchange, boasting transparency, user security, and regulatory compliance. However, over the years, the exchange has faced repeated accusations of misleading advertising, opaque operations, and customer fund mismanagement.
These allegations have raised red flags about the credibility of the company’s practices and its adherence to international regulatory standards.
Documented History of Misrepresentation
CEX.IO’s past is marred with controversies that lend credibility to the current allegations:
- False Advertising Claims
CEX.IO has been accused of presenting misleading information about its trading fees and liquidity. In several instances, users reported unexpected charges and hidden fees that were not disclosed in promotional materials. Such practices conflict with industry standards and FCA regulations requiring clear and transparent fee structures. - Asset Mismanagement Allegations
In 2019, a group of CEX.IO customers alleged that the exchange delayed withdrawals and failed to provide clear reasons for withholding funds. Although the company attributed delays to “technical issues,” the affected users suspected intentional mismanagement to cover internal liquidity problems. - Inadequate Risk Warnings
CEX.IO has frequently been criticized for failing to include prominent risk warnings in its advertisements, a direct violation of FCA rules. This issue has been raised multiple times by users and industry watchdogs but remains unresolved
Mark Lowe’s Fight for Accountability
I myself have been targeted, as a whistleblower and former customer of CEX.IO, I have accused the exchange of withholding 2.434 BTC, approximately £75,000 at current rates. My attempts to recover my funds and address broader compliance issues were met with resistance, prompting me to escalate the matter to both Gateway 21 and the FCA.
- Complaints to Gateway 21
Mr. Lowe repeatedly reached out to Gateway 21, the UK-based promotional partner of CEX.IO, highlighting violations in their advertising materials. He pointed to the absence of mandatory disclaimers about the risks of cryptocurrency trading and the use of misleading language suggesting guaranteed financial success. Despite his persistent efforts, Gateway 21 failed to take meaningful action to rectify these breaches.
Ignored Warnings
Internal emails reveal that Gateway 21 CEO Carly Nuzbach Lowery raised concerns with CEX.IO executives, Oleksandr Lutskevych and Dmytro Kalynovskyi, about their advertising practices. However, the exchange’s leadership prioritized suppressing Mr. Lowe’s claims rather than addressing the root issues. Their strategy included undermining Mr. Lowe’s credibility and disrupting his online presence to limit the spread of his allegations.
CEO CEX.IO Oleksandr Lutskevych
The Whistleblower Emails
The insider emails obtained by Mr. Lowe provide explicit evidence of unethical practices and regulatory breaches:
- Asset Misappropriation
In a November 8, 2024, email, CEX.IO executives dismissed the idea of returning Mr. Lowe’s BTC, claiming it would embolden him to escalate further. Instead, they focused on discrediting him and neutralizing the fallout from his complaints. - Hacking Allegations
The emails also confirms efforts to disrupt Mr. Lowe’s personal website, a disturbing revelation that raises questions about CEX.IO’s methods for managing dissent.
- Regulatory Breaches
Gateway 21’s CEO, Ms. Lowery, explicitly stated her concerns about the company’s non-compliance with FCA advertising standards, warning of potential regulatory scrutiny. However, these warnings were largely ignored by CEX.IO’s leadership.
Gateway 21’s Role in the Scandal
As CEX.IO’s promotional partner in the UK, Gateway 21 bears significant responsibility for ensuring compliance with local regulations. Yet, the emails suggest a troubling lack of oversight and accountability:
Failure to Act
Despite being aware of the FCA violations in CEX.IO’s promotional materials, Gateway 21 continued its partnership with the exchange. This inaction not only endangered Gateway 21’s reputation but also exposed it to potential regulatory penalties.
Prioritizing Business Over Compliance
Ms. Lowery’s communications reveal a conflicted approach: while she expressed concern about regulatory risks, she hesitated to terminate the partnership with CEX.IO, citing business interests. This decision underscores the broader issue of profit-driven priorities in the crypto industry.
CEO Gateway 21 Carly Kristen NUZBACH LOWERY
The FCA’s Inaction
On November 22, 2024, Mr. Lowe submitted the evidence to Nikhil Rathi, CEO of the FCA, urging immediate investigation into CEX.IO and Gateway 21. Despite the gravity of the allegations, the FCA has yet to respond.
This silence has fuelled scepticism about the agency’s commitment to protecting consumers and enforcing compliance in the rapidly evolving cryptocurrency market.
Broader Implications for the Crypto Industry
The allegations against CEX.IO and Gateway 21 highlight systemic issues within the cryptocurrency sector:
- Lack of Transparency
Many exchanges operate with minimal transparency, making it difficult for users to verify claims about liquidity, fees, and security. - Weak Regulatory Enforcement
Cases like this expose the limitations of current regulatory frameworks, which struggle to keep pace with the innovations and complexities of the crypto industry. - Consumer Vulnerability
Without robust oversight, consumers remain vulnerable to deceptive practices and asset mismanagement, eroding trust in the sector.
A Call for Action
The evidence against CEX.IO and Gateway 21 demands urgent regulatory and legal action. The FCA must investigate these allegations to restore confidence in its oversight capabilities and protect consumers from further harm. If the agency fails to act, Mr. Lowe has vowed to escalate the matter, including releasing the full cache of insider emails to the media and reaching out tom the new US administration for help.
This case serves as a stark reminder of the need for greater accountability and transparency in the cryptocurrency industry. For now, the public watches as the FCA’s next move—or lack thereof—could set a precedent for how such cases are handled in the future.
