British prosecutors are investigating a failed crypto project that raised tens of millions from retail investors before shutting down.

The U.K. Serious Fraud Office said Thursday it arrested two men as part of an inquiry into Basis Markets, a collapsed crypto hedge fund that allegedly defrauded backers out of $28 million.

The office executed search warrants in Herne Hill and near Bradford, seizing digital devices and documents. Authorities suspect the men whose identities remain undisclosed of fraud and money laundering related to two rounds of fundraising that took place between November and December 2021.



Basis Markets was able to raise at least $28 million through two public fundraisers: one in November 2021 through an NFT membership sale, and another in December through a token offering, according to the SFO. The funds were meant to launch “crypto hedge fund” arbitrage strategies to retail investors. 

"With our expanding cryptocurrency capability, we are determined to pursue anyone who would seek to use cryptocurrency to defraud investors," SFO Director Nick Ephgrave said in a statement.

The investigation is ongoing, and the SFO has asked the public to come forward with any information that could help. Decrypt reached out to SFO for comment on the eligibility of victims for restitution and whether other enforcement agencies are coordinating.

Hours after U.K. authorities announced their probe, the BASIS token dropped nearly 40% before settling at a 28% loss on the day. The token has been effectively dead since April 27, 2022, when $10.8 million was dumped in a single day, according to CoinGecko's historical data.

By June of the same year, “investors were informed that, due to proposed new US regulations, the project could no longer proceed as planned,” the SFO stated.

Basis Markets pitched itself as a “yield optimizer for directionless trading,” according to snapshots recorded on Wayback Machine.

“Our direction is we're going to build a decentralized liquidity pool,” one of the founders, operating under the pseudonym TraderSkew and named as Adam in what appears to be an investor call, said in a documented video. “The limited equity owners […] You will own all of the assets.”

The individual appears to be Adam Cobb-Webb, a 48-year-old UK national identified through CFTC documentation from 2023, where the commission fined Cobb-Webb $150,000 for spoofing oil futures contracts during the same period he was promoting Basis Markets.

Investors were promised a low-risk yield via basis trading, a strategy exploiting futures premiums across markets. Funds were allegedly routed directly to personal wallets controlled by the anonymous team, according to an investigation series published by the group Crypto Sleuth Investigations.

Decrypt has reached out to the group for comment.

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