The United Kingdom is host to at least 168 companies accused of running fraudulent crypto or foreign exchange (forex) scams, according to an independent analysis.

A joint investigation by media firms the Bureau of Investigative Journalism and the Observer published Jan. 29 found that organized crime groups are using the U.K. as their base due to its “lax regulation.”

The actual number of U.K.-based crypto or forex companies involved in scams is likely far greater than 168 as the number was calculated by reviewing lists of suspected shell companies and cross-referencing them with reports of fraudulent activity on various websites.

Around half of the companies found were linked to so-called “pig-butchering scams.”

A pig-butchering scams is an insidious scheme where the scammer builds trust with the victim — often incorporating romance — before convincing them to deposit money or crypto onto a trading platform or virtual wallet that the scammer controls.

The scammer then continues to “fatten” the victim and build further trust before persuading them to transfer a much larger sum, only to then make off with the funds.

Victims were often approached on social media or through dating websites such as Tinder, according to the report.

Additionally, many of the victims interviewed in the report said that the companies appeared more legitimate as they were based in the U.K., saying they would not have fallen for the scam had the companies been located elsewhere.

Registering a company in the U.K. costs as little as 12 British pounds ($14.85) and requires no form of identification, making it easy for fraudulent companies to register there and gain “sham credibility.”

Companies are required to provide a U.K. office address to register, however, which has led to some residential addresses being bombarded with letters intended for companies that claim to have an office there.

Letters that a U.K. resident claimed to have received that were intended for shell companies registered at their address. Source: The Observer

“What’s been happening in the U.K. is unconscionable,” financial crime investigator Graham Barrow was quoted as saying. “We have known for 20 years at least that U.K. companies are being used in these scams and that we are probably the world’s biggest provider of scam companies.”

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The U.K. government has been trying to crack down on crypto companies in the region, with the U.K. Financial Conduct Authority requiring that all businesses that carry on crypto asset activity register with it as of Jan. 10, 2020.

The regulator has been very stringent with its approvals, however, with many crypto-related businesses continuing to operate as unregistered businesses as it tries to find a balance between providing a safe environment for investors and supporting innovation in the industry.