FTX collapse shows crypto is ‘too dangerous’ not to regulate, Bank of England deputy governor says
Cryptocurrency trading is “too dangerous” to remain outside mainstream financial regulation and could pose “a systemic problem” without action, the deputy governor of the Bank of England has warned.
Speaking for the first time since the founder of the crypto trading platform FTX was arrested and charged with massive fraud, Sir Jon Cunliffe told Sky News the Bank is considering regulation to protect retail investors in the “casino” of crypto trading, as well as the wider financial system from potential crypto shocks.
Sam Bankman-Fried was extradited on Wednesday from the Bahamas to the US where he will appear in a New York court charged with eight counts of fraud, money laundering and breaking campaign finance.
The collapse of FTX left more than one million customers unable to withdraw assets worth an estimated $8bn.
Prosecutors allege he used FTX’s customers’ money to cover losses in his private crypto hedge fund Alameda Capital in what the company’s new chief executive told Congress was “old-fashioned embezzlement”.
An estimated 80,000 of FTX’s customers are based in the UK, with individual liabilities as high as £5m in life savings according to a lawyer acting for dozens of victims.
Louise Abbott, a crypto-fraud specialist, told Sky News: “These individual investors have invested anything from a couple of thousand pounds up to about £5m, so massive amounts of money, all completely frozen, I’m going to use the word frozen rather than lost, because hopefully there is going to be something given back to them at some point. But this is huge money, huge money lost or stuck, or frozen in time.”
Crypto credibility
The episode is a huge blow to the credibility of cryptocurrencies, digital assets that draw their value not from state backing, but from relative scarcity and the willingness of other investors to trade in them.
Mr Bankman-Fried had cultivated links in Washington and on Wall Street, making millions of dollars in political donations and attracting high-profile investors to his platform.
His fall has emphasised the volatility of crypto investment and the lack of regulation in an industry that, despite widespread scepticism, is attracting growing attention from the financial mainstream.
Efforts to regulate
In the UK, regulators have tried and failed to impose their writ on crypto exchanges domiciled offshore, while the government has a goal, set out in April by Rishi Sunak when he was chancellor, to make the UK a “global crypto assets hub”, an ambition that depends in large part on effective regulation.
Sir Jon, deputy governor with responsibility for financial stability, told Sky News the Bank’s regulation efforts were aimed at protecting individuals and maintaining financial stability.
Deputy Governor of the Bank of England Jon Cunliffe
“There’s a lot of activity that’s developed over the last 10 years on the trading and sale of crypto assets, assets without any intrinsic value, so they’re incredibly volatile. And all of that has grown up outside of regulation,” he said.
“What we saw in FTX… is a number of activities which in the regulated financial sector, would have had certain protections. We saw things like clients’ money appears to have gone missing, conflicts of interest between different operations, transparency, audit and accounting. All of the perhaps boring things that happened in the normal financial sector, didn’t really happen in that set of activities. And as a result, I think a lot of people have lost a lot of money.”
Comparing crypto trading to a casino, Sir Jon said investors who wanted to speculate should be able to do so without the risk of losing access to their funds.
“It is in effect, in my view, a gamble, but we allow people to bet, so if you then want to get involved in that you should have the ability to in a place that is regulated in the same way that if you gamble in a casino it’s regulated. You should have the full information on the tin as to what you’re doing.”
The Bank also has to address the risk to financial stability that could flow from digital assets as institutional investors and banks explore exposure to an estimated $1trn in crypto assets.
“This trading of crypto assets was not big enough to destabilise the financial system, but it was starting to develop links with the financial system,” Sir Jon said. “I don’t know how that will develop. But we had banks and investment funds and others who wanted to invest in it. I think we should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem.
“So I don’t think it will be possible to say this can be just kept outside of the financial system. It’s too dangerous. I think it is difficult but possible to say, let’s bring it in, where and when we think we can manage the risk to the standards we’re used to.”
Potential for blockchain
While cryptocurrencies have proved consistently volatile since the inception of Bitcoin 14 years ago, the underlying technology, blockchain, is considered to have significant potential across industries to manage data, and speed up and simplify transactions.
Blockchain provides proof of transactions on a public record known as a distributed digital ledger.
Each new exchange of cryptocurrency is recorded on a “block” which is added to the “chain” containing details of the new transaction and the previous transaction, meaning it can only be falsified by altering all previous links.
The system is maintained and overseen by every computer linked to the network rather than a central monitoring entity.
Mercedes is exploring the potential of blockchain to manage the data that will enable autonomous driving, while Vodafone is exploring its utility in managing the billions of micro-transactions that will be facilitated by the next generation of internet technology.
‘Smart money’ could also simplify global supply chains, with the prospect of micro transactions using stable tokens being linked to individual parts in production processes.
“There are technologies here which could, and I stress could, be of real use in the normal financial system, more efficient ways of doing things, potentially more resilient ways of doing things,” said Sir Jon.
“That hasn’t been proven in the crypto world. But if we could provide a regulatory space where people can see if they can develop products using this, we might be able to get the benefit of some of those technologies.”
The Bank of England’s own digital coin
As part of this process the Bank of England is consulting on plans to develop its own central bank digital coin, an electronic version of sterling that would carry the same security as a pound coin, but with the digital flexibility that could one day replace cash.
“Physical cash will always be made available by the bank as long as people want it and many people depend on it. But it’s not fully usable in the way we live now. So the question for the Bank of England is that as the way we as society changes, as we live our lives more digitally, should we continue to provide money to the public which is usable across a range of transactions?
“This would be a digital equivalent of the’ I promise to pay the bearer’ promise, which in the end underpins confidence in money in the UK. Whenever you want, you can turn that money you hold in the bank into basically Bank of England money backed by the state with that promise to pay the bearer.
“We want to ensure that as physical cash becomes less usable in many parts of the economy, perhaps we need to offer something digitally to provide that underpinning.”
UK
Police investigating alleged attack on prison officer by Southport triple murderer Axel Rudakubana
Schoolchildren are asking teachers how to strangle a partner during sex safely, a charity says, while official figures show an alarming rise in the crime related to domestic abuse cases.
Warning: This article contains references to strangulation, domestic abuse and distressing images.
It comes as a woman whose former partner almost strangled her to death in a rage has advised anyone in an abusive relationship to seek help.
Bernie Ryan, chief executive of the Institute for Addressing Strangulation, has been running the charity since its inception in 2022 after non-fatal strangulation became a standalone offence.
“It’s the ultimate form of control,” she says.
She says perpetrators and victims are getting younger, while the reason is unclear, but strangulation has seeped into popular culture and social media.
“We hear lots of sex education providers, teachers saying that they’re hearing it in schools.
“We know teachers have been asked, ‘how do I teach somebody to strangle safely?’
“Our message is there is no safe way to strangle – the anatomy is the anatomy. Reduction in oxygen to the brain or blood flow will result in the same medical consequences, regardless of context.”
Bernie Ryan, CEO of the Institute for Addressing Strangulation
A recent review by Conservative peer Baroness Gabby Bertin recommended banning “degrading, violent and misogynistic content” online.
Violent pornography showing women being choked during sex she found was “rife on mainstream platforms”.
Ms Ryan says she “wants to make sure that young people don’t have access to activities that demonstrate that this is normal behaviour”.
Read more from Sky News:
Suspect accused of Derby bank murder appears in court
Man whose body was found in suitcase ‘had raped teenager’
Strangulation is a violent act that is often committed in abusive relationships.
It is the second most common method used by men to kill women, the first is stabbing.
According to statistics shared by the Crown Prosecution Service, in 2024 there was an almost 50% rise in incidents of non-fatal strangulation and suffocation – compared to the year before.
Kerry Allan pleads for other victims of abuse to seek help
Domestic abuse victim Kerry Allan has a message for anyone who is in an abusive relationship.
Kerry met Michael Cosgrove in September 2022. While she said “at the beginning it was really good”, within months he became physically abusive.
In August last year her friends found his profile on a dating app.
“I confronted him and he denied it. I knew we were going to get into a big argument and I couldn’t face it, so I said I was going to my mum’s for a few days and take myself away from the situation.
“I came back a few days later and stupidly I agreed we could try again and everything escalated from that.”
Injuries to Kerry’s chest. Pic: CPS
In the early hours of 25 August the pair had come in from a night out at a concert and got into an argument.
“He was having a go at me, accusing me of flirting with other people, and I was angry. I told him he had a nerve after what he’d done to me in the week and how he humiliated me.
“I told him that I wanted to leave, that we were done and that I wanted to go to my mum’s and that’s when it got bad.
“He pinned me to the bed and that’s when he first strangled me.”
Kerry’s neck injury. Pic: CPS
Kerry says this was the first time she’d ever been violently assaulted. Cosgrove was eerily silent as he eventually let go and Kerry gasped for air.
“I remember trying to get my breath back, I was crying and hyperventilating… I was sick on the bedroom floor and I was asking him to go.”
Cosgrove strangled her for a second time before letting go again.
“He was saying I wasn’t getting out of this bedroom alive. I was dead tonight, he hoped that I knew that. Just kept saying how I’d ruined his life.”
Injury to Kerry’s eye. Pic: CPS
“I remember feeling a sort of shock thinking at this point, I’m not going to get out of this bedroom, he’s actually going to kill me.”
Kerry began screaming and shouting for help as loud as she could.
Her neighbours heard the commotion and called the police. While they were en route, Kerry was once again being assaulted.
Bleeding in Kerry’s eye
“I ran over to the bedroom window and tried to jump out, he grabbed me as I went to open the window, and we struggled. And then I was back in the same position, he was on top of me on the bed, and his hands were round the throat again. But this time it didn’t stop.
“I remember trying to struggle and trying to kick out and hit him and I just kept thinking that I definitely was going to die, because at this point, it wasn’t stopping.”
The next memory Kerry has is opening her eyes to see police and paramedics in the bedroom.
Michael Cosgrove. Pic: CPS
Cosgrove had heard the sirens, jumped out of the bedroom window and went to hide in Kerry’s car.
Kerry remembers opening her eyes to paramedics caring for her: “I remember thinking, I’m alive. I couldn’t believe it. I couldn’t believe that I was alive and I wasn’t dead. My last memory is him being on top of me with his hands on my throat.”
Kerry met Michael Cosgrove in September 2022
She gives this advice to anyone who is in an abusive relationship: “Please speak to somebody, whether it’s friends, family, a work colleague, whether it’s somebody online, whether it’s a charity that you’re directed to, any sort of abuse is not okay.
“Whether it starts off emotional, they often start off that way, and they escalate, and they can escalate badly.
“Take what happened to me as a huge warning sign, because I wouldn’t want anyone else to be in the position I’ve been in the last eight months.”
Cosgrove was found guilty of attempting to murder Kerry and intentional strangulation.
He will be sentenced in July.
If you suspect you are being abused and need to speak to someone, there are people who can help you.
The National Domestic Violence Helpline: 0808 2000 247
Respect, the helpline for male domestic abuse victims: 0808 8010327
Galop, the LGBT+ anti-violence charity: 0800 999 5428
Two men have been found guilty of cutting down the famous Sycamore Gap tree that stood for more than 150 years.
Daniel Graham and Adam Carruthers were convicted of causing more than £620,000 worth of damage to the tree and more than £1,000 worth of damage to Hadrian’s Wall in Northumberland.
On 27 September 2023, the pair drove 30 miles through a storm to Northumberland from Cumbria, where they both lived, before felling the tree overnight in a matter of minutes.
The Sycamore Gap tree before it was cut down. Pic: CPS
The pair each denied two counts of criminal damage to the sycamore and to Hadrian’s Wall, which was damaged when the tree fell on it, but were convicted by a jury at Newcastle Crown Court on Friday.
The Sycamore Gap tree sat in a dip in the landscape and held a place in pop culture, featuring in the 1991 Kevin Costner film Robin Hood: Prince of Thieves.
It also formed part of people’s personal lives, as the scene of wedding proposals, ashes being scattered and countless photographs.
Footage of the moment the tree was felled was played during the trial.
Daniel Graham. Pic: Northumbria Police/PA
Adam Carruthers. Pic: Northumbria Police/PA
In the clip, the sound of a chainsaw can be heard, and the silhouette of a person can be seen, before the trunk eventually tumbled.
The footage was shot on Graham’s iPhone 13, with the metadata providing the coordinates of the tree.
Part of tree kept as ‘trophy’
Over the course of the trial, the pair blamed one another, but the prosecution argued they were both responsible for what the court heard was a “mindless act of vandalism”.
As well as the video footage of the felling, an image of a piece of wood and a chainsaw was found on Graham’s phone.
Adam Carruthers (R) and Daniel Graham (L) worked together felling trees. Pic: CPS/PA
An image of a piece of wood and a chainsaw was found on Graham’s phone. Pic: PA
Richard Wright KC, prosecuting, told the court: “This was perhaps a trophy taken from the scene to remind them of their actions, actions that they appear to have been revelling in.”
Voice notes played in court
The jury was also played voice notes the pair had sent one another, commenting on the media coverage the incident was receiving.
In one of them, Graham, 39, said to 32-year-old Carruthers: “Someone there has tagged like ITV News, BBC News, Sky News, like News News News”, before adding: “I think it’s going to go wild.”
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Sycamore Gap seeds saved
Another piece of evidence was a photo of the defendants felling a different tree, about a month before the Sycamore Gap was cut down.
The prosecution said Graham, who owned a groundworks company and Carruthers, who worked in property management and mechanics, were “friends with knowledge and experience in chainsaws and tree felling”.
From the beginning, much of the trial focused on the significance of the tree, with Judge Mrs Justice Lambert telling the jury to put their “emotion to one side” before proceedings began.
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Voicenotes from Sycamore Gap tree trial
‘Mindless acts of violence’
Northumberland Superintendent Kevin Waring, of Northumbria Police, said: “We often hear references made to mindless acts of vandalism – but that term has never been more relevant than today in describing the actions of those individuals”.
Graham and Carruthers gave no explanation for why they targeted the tree, he said, “and there never could be a justifiable one”.
Northumbria Police and Crime Commissioner, Susan Dungworth, called the felling of the tree “unfathomable” and said, although “there was no remorse [from the defendants], there was compelling evidence, and now there will be justice”.
Gale Gilchrist, chief crown prosecutor for CPS North East, said Graham and Carruthers took “under three minutes” to bring down the “iconic landmark” in a “deliberate and mindless act of destruction”.
She said she hoped the community “can take some measure of comfort in seeing those responsible convicted”.
‘Enormity of the loss’
Reflecting on the verdict and the actions of the pair, Tony Gates, chief executive of Northumberland National Parks Authority, said: “It just took a few days to sink in – I think because of the enormity of the loss.
“We knew how important that location was for many people at an emotional level, almost at a spiritual level in terms of people’s connection to this case.”
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Moment Sycamore Gap tree cut down
Read more from the trial:
Two men went on ‘moronic mission’ to fell Sycamore Gap tree
Man told police he was being ‘framed’ over tree felling
Defendant says friend wanted to cut down world’s ‘most famous tree’
Jurors played voicenotes in Sycamore Gap tree trial
The tree’s stump still sits by Hadrian’s Wall, where new shoots have been emerging.
Its largest remaining section will go on display at the National Landscape Discovery Centre in the Northumberland National Park later this year.
The effort to preserve the tree’s legacy also goes beyond the region where it stood.
Forty-nine saplings taken from the tree have been conserved by the National Trust. They will be planted in accessible public spaces across the country as “trees of hope”, which will allow parts of the Sycamore Gap to live on.
The defendants, who didn’t react when the verdicts were delivered, will be sentenced in July.
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