One of the men behind the scheme used the money to pay for a £24,000 Rolex watch and spent £20,000 on his wedding.
Following an application by the regulator, the High Court on 14 May declared that Xcore Capital Limited (Xcore) and Jonathan Chitty had carried on an unauthorised investment scheme.
While the scheme took in at least £1 million from investors only a small amount was ever used for trading.
Consumers gave money to Xcore in return for a promised 6% annual return, said the FCA.
Investors were led to believe that Xcore would be trading their money on forex and equity markets. However, the majority of their money was instead used to fund an office in Mayfair, brokers’ wages and Mr Chitty’s lifestyle.
The FCA reported that Mr Chitty’s personal spending included £102,000 on cryptocurrencies, £58,000 on luxury goods, £24,000 on a Rolex watch and £20,000 towards his wedding.
The High Court Order declares that Xcore ran a deposit taking scheme without the necessary authorisation by the FCA, and that Jonathan Chitty was knowingly concerned in the scheme.
It requires Xcore and Mr Chitty to pay the FCA £917,231 which is the full value of all outstanding sums owed to consumers. The FCA will distribute to consumers any funds it is able to recover from Xcore and Mr Chitty.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Prompt action by the FCA stopped this scheme in its tracks and prevented victims incurring much greater losses.”
On 20 November 2018, following an application by the FCA, a Judge in the High Court imposed a freezing order on Xcore and Jonathan Chitty’s assets and ordered them to stop selling investments regulated by the FCA. This order remains in place until further order of the Court.