TikTok Accused of Unlicensed Crypto Exchange Activities in the UK

TikTok, the popular social media platform, is facing allegations of operating as an unlicensed cryptocurrency exchange in the United Kingdom. A former compliance consultant for a major private bank has sent a letter to the Financial Conduct Authority (FCA) outlining these concerns.

The letter claims that TikTok's reward system, which allows users to purchase virtual coins and send them to content creators, can indirectly be used to exchange these coins for real money. This, according to the consultant, makes TikTok a de facto cryptocurrency exchange.

The concern is that TikTok is not registered with the FCA as a money service business. This means it may be vulnerable to being exploited for money laundering and other illicit activities.

While the letter specifically mentions TikTok's reward system, it's unclear if the virtual coins used in this system are actually considered cryptocurrencies. The report from Financial News only refers to them as "virtual coins" or "virtual tokens."

TikTok has faced similar allegations in other jurisdictions. Australia's Shadow Minister James Paterson has referred the platform to the country's AML authority, and the state of Utah is suing TikTok over alleged money laundering and facilitation of child sexual exploitation.

In response to these allegations, TikTok has been hiring more compliance staff to strengthen its regulatory oversight.

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