Digital currency platforms have grown to become a sizable sector of the UK economy. Blockchain.com was founded in 2011 and was last valued at c. £5 billion in 2020 having attracted tens of millions of customers. Senior executives at the top of the business now face prosecution for failure to file the company’s accounts on time.
Ed Holmes and Aleks Valkov of our Fraud team explain how this prosecution came about and consider whether it points to wider issues within the crypto industry.
What happened at Blockchain.com?
In May 2024, Nicholas Cary (co-founder of Blockchain.com and its president) and Al Turnbull (operations executive) received a summons issues by Companies House. The magistrates’ court first heard the case in September; this will be followed by a further hearing in November.
It appears from Companies House that the last full accounts for Blockchain.com which were filed were made up to 31 December 2020 (the 2021 accounts are now two years late). All UK registered companies, public and private, must file annual accounts with Companies House or face penalties and the offence is committed by “every person who immediately before the end of that period was a director of the company”.
Blockchain.com acknowledged the proceedings, blaming the delay on “significant reduction in the wider group’s workforce” which has “taken a period of time to stabilise” and stating its directors were following the “appropriate steps to remediate the company’s compliance with all statutory annual filing requirements”.
Commentary
Recent inaccuracies on Companies House and widespread non-compliance have alarmed the Registrar of Companies for England and Wales, the UK government and other agencies, leading to new legislation that came in earlier this year via the Economic Crime and Corporate Transparency Act 2023. We can expect to see more proceedings of this type, especially for clear-cut failures.
In Blockchain.com’s case, the directors would be guilty of an offence unless they can show that they took all reasonable steps to comply with the filing requirement by the deadline. The court also has power to grant relief if they acted honestly and reasonably and having regard to all the circumstances ought fairly to be excused. Cases like these turn on their facts but, in circumstances where the accounts are so late and there is a general move to crack down on these kinds of breaches, there must be some doubt whether such discretion would be granted.
Crucially, this offence is considered to be committed by the company directors, which could have serious repercussions for any crypto business aiming to thrive in the UK. Further, any kind of reputational harm to a crypto exchange such as this is unwelcome in what is a notoriously volatile industry.
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