Reform accused of using third party to turn crypto into cash and hide donors

Reform UK has been converting crypto donations into cash before they reach the party’s coffers, obscuring the original sources of the funding.

Last year, Nigel Farage claimed his party had received “a couple” of crypto donations, confirming previous reporting by The Observer.

However, the party has not registered any donations made in the digital currency, prompting Labour to call on the Electoral Commission to investigate.

Sources close to the matter told The Observer that this is because Reform’s crypto donations had “come into a wallet controlled by a permissible donor” and were then turned into a regular currency such as sterling, noting that they were concerned because “this makes it much harder to track”.

Crypto wallets all have an address that acts as a public ID through which all transactions are recorded on a blockchain – a ledger showing the movement of crypto funds. While it is possible to track movements between wallets, it is not possible to tell who ultimately owns the wallet.

A spokesperson for Reform said: “All donations are converted into cash by a regulated third party [that] does this for us. Reform itself has no wallet. The party meets all its legal responsibilities.”

Reform did not respond to further queries, including whether the third party is its crypto payments processor Radom, which is regulated in Poland rather than by the UK’s Financial Conduct Authority. The party also failed to answer questions about who the ultimate donors were.

The Electoral Commission said the location of the third party would have a bearing on its ability to establish the origins of the money.

A spokesperson said: “For UK crypto payment providers registered with the FCA, we are able to request details of their customers in a similar way to traditional financial institutions. However, we are limited in the information we can obtain from crypto providers that are based overseas.”

Liam Byrne, Labour MP for Birmingham Hodge Hill and Solihull North, who is pressing for a ban of crypto donations, said: “Opaque crypto transactions and third-party cash-outs are opening up new ways to disguise the true source of political donations and hide the hands seeking to pull the strings of Reform politicians.

“These fresh revelations by The Observer underline just why the elections bill needs to require full disclosure of beneficial ownership, a ban on indirect and anonymised donations, and robust powers to detect and stop illicit finance across crypto, cash and commodities.”

Last week, MPs from the joint committee on national security strategy (JCNSS) called for a binding moratorium on crypto donations, warning that they pose an “unnecessary and unacceptably high risk to the integrity of the political finance system”.

Many campaigners agree. Steve Goodrich, head of research and investigations at Transparency International, said: “Cryptocurrencies already pose a major challenge for regulators and law enforcement because of the anonymity they provide to users.

“When you have a third party, unregulated in the UK, transferring crypto donations into fiat [cash], then sending them onwards to a political party, then there’s an extra layer of complexity that risks obfuscating the origin of funds, and bypassing any simple ban on these gifts.”

Tim Picton, senior advocacy adviser for Spotlight on Corruption, called for a ban on all crypto donations, including any made through payment processors, to “remove some of the risks of illicit money and foreign interference undermining our democracy”. “T o prevent the risks of impermissible or dodgy crypto donations being turned into fiat before being passed to a political party, t here should be a simple requirement for all political donations to be made through a UK bank account,” he said. “UK banks are highly regulated and very adept at handling risk and detecting red flags.”

Anna Turley, chair of the Labour party, said: “Nigel Farage has serious questions to answer over the crypto donations apparently pouring into his party. It’s vital that the public has full transparency as to who’s funding Reform UK and how and can be reassured as to whether any rules have been broken.”