Reform UK has been given a record £36m donation by Ben Delo, a British cryptocurrency billionaire convicted in the US for failing to implement adequate anti-money laundering controls.

The businessman, who has moved back to the UK from Hong Kong, is now the biggest UK political donor by far, dwarfing the £15m contribution to Reform UK from Thailand-based Christopher Harborne.

The huge donation will be a boost for party leader Nigel Farage at a time when he is facing a police investigation into overseas funding for Reform, plus a standards inquiry into a £5m undeclared personal gift from Harborne.

It had been thought Delo could be caught by the overseas cap requiring donors to have been resident in the UK for 12 months before giving more than £100,000 but Reform insisted earlier this month that they were confident Delo would not have to take back any cash.

Delo was convicted in the US in 2022 for failing to implement adequate anti-money laundering controls in his trillion-dollar cryptocurrency business BitMEX, before being pardoned by Donald Trump. He has previously given Reform £8m since the start of the year.

His gifts show the rise of Reform’s mega-donors, which Labour has been considering clamping down on.

Keir Starmer shied away from the idea of a cap on all donations and Andy Burnham also recently backed away from supporting a cap. However, more recently the government said it was looking at ways of dealing with mega-donations to make sure a few figures are not having an excessive influence in politics.

On Friday night, Stella Creasy, the Labour MP pushing for a cap, said: “The government has admitted UK mega-donors are a problem – donations like this show why we must act and the good news is it’s not too late to do something about them.

“We can still stop these people from distorting the next election by confirming what the cap should be on UK donations in the representation of the people bill in the Lords.

“This donation tonight – more for Reform on one day than the entire amount spent by Labour in the general election – shows that cannot come too soon to protect British democracy.”

Many more Labour MPs were also horrified by the prospect of such a huge cash injection for Reform ahead of the next election.

Delo’s donation was revealed in the Telegraph, which was given the information by Reform after the party was approached by the Sunday Times earlier on Friday.

Farage said: “I am honoured and humbled that Ben Delo has shown such confidence in Reform. Ben knows that we are the only party that can turn the country around and reverse Britain’s decline.”

In a Telegraph article in April, Delo explained his motivation for turning to Reform, saying England was his home and that “the biggest obstacle to national recovery is the entrenched self-deception of our elites”.

“Their regime of nonsense now poses such a grave threat to the UK that, for the first time in my life, I’ve become politically active,” he wrote.

He said that as a person on the autism spectrum, he did not like it that “the official culture of government now forces everyone to be chronically dishonest”, citing expression of views on transgender people.

In his Telegraph article, he wrote: “I helped build one of the world’s first major crypto trading platforms, fell foul of US regulators, accepted a plea bargain and a civil fine for a regulatory failing that isn’t even a crime in the UK, but then ended up being pardoned by Donald Trump, the US president, anyway.”

Delo, an Oxford graduate who describes himself as a champion of free speech, supports more than 50 organisations across the political spectrum and public life, as well as non-affiliated groups and individuals, from a political base near Westminster Abbey.

A Guardian investigation into Delo’s political base found he had given support in kind to Rupert Lowe, the anti-migration MP challenging Farage from the right, while also connecting with more mainstream figures including the Conservative leader, Kemi Badenoch, and the former Tory cabinet minister Michael Gove.

Delo’s lawyers previously told the Guardian that he provided space for those with diverse views to express them, and financial support to a broad range of organisations, many of which had conflicting views. This did not mean he endorsed the opinions of each, they said.

The Liberal Democrats’ Cabinet Office spokesperson, Lisa Smart, said: “Nigel Farage wants to bring Trump’s America to our shores by buying his way into power. He’s trying to get into Number 10 as if it’s a stop on a Monopoly board.

“It can’t go on like this. Andy Burnham needs to introduce a cap on political donations. Our democracy depends on it.”