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TikTok has been accused of operating as an unauthorized crypto exchange in the UK. The allegations were made in a letter sent to the UK’s Financial Conduct Authority (FCA) by a former compliance consultant for a leading private bank.
Details of the TikTok Allegations
According to Financial News, TikTok’s virtual currency is alleged to be indirectly convertible into fiat currency through the platform’s rewards system. This means the social media giant could face scrutiny under the FCA’s anti-money laundering and counter-terrorism financing regulations.
The letter reads:
“TikTok facilitates the transfer of money through its rewards program and arranges or facilitates the exchange of crypto assets for money or the exchange of money for crypto assets.”
TikTok users can buy virtual currencies called “TikTok Coins” and send gifts to creators. These gifts can then be converted into “diamonds” and converted into fiat money. The letter claims that TikTok is not registered with the FCA, making it vulnerable to illegal activities such as money laundering.
However, it is not clear in the report why TikTok Coins are classified as cryptocurrency, as it only refers to “virtual tokens” and “virtual currencies”. The identity of the compliance expert who made the allegations was also not disclosed.
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TikTok has previously been reported to Australia’s anti-money laundering authority with similar allegations, and is currently hiring more compliance staff. The US state of Utah is also suing TikTok over allegations of money laundering and facilitating child sexual exploitation through its rewards system.