Two years have passed since IronFX became the subject of high profile allegations that it was not paying IBs, affiliates and clients in China, yet still the firm operates, and monies are still owed. FinanceFeeds has found that employees of the firm who left the company a long while ago and are privy to vital information are far too afraid to step forward, even now.
Over two years have now passed since notorious retail FX brokerage IronFX began to delay the payment of its introducing broker (IB) network in China, leading to a vast national televised campaign in which a large number of Chinese traders and introucing brokers stormed the company’s Shanghai office whilst Chinese television broadcast the event across the nation.
In September 2014, a criminal fraud investigation was filed by Chinese authorities after the company’s officials were subjected to a publicly available televised grilling by affiliates which emanated as a result of a television show called Market Wired Shenzhen published a 20 minute report on the operations of IronFX in China.
Subsequent protests were held across many of IronFX’s offices, including a visit to its Cyprus headquarters by Chinese IBs who erected a sign alleging that the company does not pay its affiliates, or withdrawals to customers.
Since then, FinanceFeeds has made investigations into the alleged non-payment of withdrawals by IronFX in other regions of the world.
Much discourse emerged from various regions in which IronFX had operated following its aggressive global expansion in 2013, culminating in the attraction of the wrong sort of attention from Andros Kyprianou, General Secretary of the Progressive Party of Working People (AKEL), the party which sits in opposition to President Nicos Anastasiades’ Democratic Rally party, who written a letter which relates to the control exercised by CySec in connection with specific Cyprus Investment Firms (CIFs).
Specifically, the letter from AKEL’s Mr. Kyprianou makes reference to relevant posts on electronic media including accusations that IronFX have not been abiding by the regulations as required of the CIF IronFX Global Ltd.
In the letter, the political leader stated:
“CySec must ensure that Cyprus Investment Firms (CIFs) acting within the scope of their authorization, must act in a manner which safeguards the interests of their clients and generally contributes to strengthening investor confidence in capital markets. With concern we noticed that lately reports and related posts on electronic media include allegations of violation of relevant laws and regulations of the CIF IronFX Global Ltd.” – Andros Kyprianou, General Secretary, Progressive Party of Working People, Cyprus
Mr. Kyprianou’s letter further explained that the political party notes that CySec made a decision on November 27, 2015 to reach a compromise with the IronFX over a matter within which there were reasonable suspicions of IronFX having committed possible infractions of the Investment Services and Activities and Regulated Markets Law of 2007 and Directives pursuant to it.
Despite this, the status quo remains. There has been no advancement in the repayment of monies to affiliates, IBs or customers in China, and aside from a 335,000 Euro fine from CySec and a restitution order of approximately 2 million Euros which was brokered on a civil basis, IronFX is continuing its operations as normal.
FinanceFeeds has spoken to some of the key figures among the Chinese affiliate network, as well as former IronFX employees from China who were instrumental in maintaining and garnering relationships with strategic partners and affiliates in China and the interesting common denominator among the several former key former Chinese employees in such positions is that they began to leave the company when the furore began to amass, and perhaps even more remarkably, are actually afraid of coming to the forefront with the information that they know, even having long since left the firm.
It is instrumental to the recourse that any clients or introducing brokers have over their situation that such former employees come forward and explain whether this was a genuine lack of capital and the result of what banks call ‘overtrading’ which is where a firm expands too rapidly and then cannot meet its obligations due to having used more capital than it has in expanding its operations, or whether this was a deliberate attempt to dupe Chinese IBs knowing that there would be no jurisdiction and no legal means of recovery.
One particular key Chinese figure who left the firm almost two years ago during the height of the high profile allegations of non-payment to Chinese affiliates and IBs, stated
“When I was there, the company had an energetic sales team but the operations represented a completely wrong direction.”
When asked if this particular individual ever witnessed IronFX intentionally not paying IBs, the former employee explained “Of course I know, but in my opinion it is not the boss’s intention. There is a flaw in the product. As you are in the media I cannot tell you any more.”
Even though anonymity was granted, and promised to this particular individual, the fear of repercussions was too great to elaborate even off the record. The conversation concluded with “I have to go. It’s a pity, but sh–t things happened, I wish the clients can get their money back one day”
FinanceFeeds experienced the same response from four further former Chinese employees that had instrumental positions in liaising with IBs.
Over the past few months during this research, FinanceFeeds has made several attempts to contact IronFX’s Chief Marketing Officer Yan Mai, herself a Chinese national, and answers have not been proffered.
According to extensive research conducted by FinanceFeeds, IronFX UK has established a new division of the company in the name of 8safe, and has changed the name of its UK entity from IronFX UK to 8safe, as well as having transferred shares. The transfer of shares has been conducted recently, although 8safe was incorporated in 2013.
The new company is regulated by the Financial Conduct Authority (FCA) under the registration number 585561, with the responsible person being Harsh Anavadia, who is Compliance & AML Officer at IronFX Global UK Limited.
8safe, according to the FCA register, is located at 55 Old Broad Street, London EC2M 1RX and the contact email address is email@example.com
Not only is the UK a region in which IronFX is adopting a different name, as the company’s ASIC regulated representative to target China has also gained a completely different identity, as according to ASIC IronFX Global Australia name has been changed to GVS (AU) PTY LTD.
According to the name change certification issued by the Australian Securities and Investments Commission (ASIC) IronFX Global (Australia) PTY LTD has successfully changed its name to GVS (AU) PTY LTD as of the 21st of January 2016. The company number remains as 143 154 698.
A particular point of interest with regard to the positioning of 8safe within IronFX ecosystem is the company’s public notice which states that the new 8safe company onboards clients but in fact directs them straight to Cyprus, as highlighted by the following exerpts from the document:
“8Safe UK’s role is limited to promoting the Parent Company’s service to you” and that its purpose is “assisting you with the Parent Company’s account opening process”
It continues: “If you decide to place through 8Safe UK any orders for Your trading account carried by the Parent Company, to receive those orders and transmit them to the Parent Company for execution”
The document also states: “However, it is important for you to understand that, although you will be contracting both with the Parent Company and 8Safe UK, you will be trading ONLY with the Parent Company.”
In this case, new clients can be onboarded and the company can effectively transfer its operations to the new entities, making the previous entities unable to be pursued via litigation or by law enforcement agencies.
Ruling by fear is one aspect that is very serious, however if the former key personnel that have knowledge of what happened in China are afraid of repercussions to the extent where no information is able to be transferred to law enforcers, then this is also counterproductive to reversing the current status quo and bringing those involved to book.#affiliates, #China, #IBs, #ironfx, #Withdrawal