AFX counsel says: “We find ourselves in a quandary”

Maria Nikolova

“We find ourselves in a quandary with no communication from our client”, says the legal representative of AFX in a US lawsuit brought by the Chapter 11 Trustee of Gallant Capital Markets.

The US proceedings against AFX Capital Markets Ltd., AFX Capital U.S. Corp. and STO Super Trading Online brought by the Chapter 11 Trustee of Gallant Capital Markets appear to be facing additional difficulties as indicated by a Letter filed by the defendants’ counsel with the New York Eastern Bankruptcy Court.

AFX’s counsel says she is unable to contact the defendants following the suspension of their CIF license by the Cypriot regulator and the entry into administration of AFX Markets in the UK.

AFX’s counsel says:

“We have been informed by the administrator’s office that the operation has been shut down and that the administrator has taken control of the premises and the company’s servers. We have been unable to reach AFX or its officers either through email or phone due to the administration and regulatory proceeding…”

The AFX counsel admits that the recent developments are putting them in a difficult position given that a reply is expected to the motion for sanctions filed against AFX by the Chapter 11 Trustee of Gallant Capital Markets in late September.

“We find ourselves in a quandary with no communication from our client yet a deadline to respond to the Sanctions Motion”, the AFX counsel says.

On October 24, 2019, a hearing is set to be held before the Honorable Elizbeth S. Stong, United States Bankruptcy Judge, Eastern District of New York, on the motion of Esther DuVal, solely in her capacity as the Chapter 11 Trustee of the jointly administered estates of Avenica Inc. and Gallant Capital Markets Ltd., seeking the entry of an Order for a judgment against the AFX defendants.

The Chapter 11 Trustee is seeking sanctions and fees against AFX for engaging in bad faith and injunctive relief.

Under the Complaint against AFX, throughout 2015 and 2016, Gallant deposited approximately $2.35 million (for its benefit) into a Gallant account maintained at AFX. Within the two-week period prior to Gallant’s commencement of its bankruptcy case, there was a balance of approximately $2.4 million in the Gallant account at AFX. Around that time, Gallant made multiple demands upon Defendants for the turnover of Gallant’s funds—all of which were disregarded.

Nevertheless, AFX withdrew the remaining balance, without authorization and without basis, on the Filing Date—in violation of the automatic stay. This case involves core issues whereby the Trustee is seeking a turnover of Gallant property and recovery of assets of the Gallant estate, and enforcement of the automatic stay.

Read this next

Digital Assets

Revolut receives FCA’s go-ahead to launch crypto trading

British fintech and banking firm Revolut has received a regulatory go-ahead to launch its cryptocurrency services in the UK.

Digital Assets

GBTC share is trading at 36% below bitcoin spot price

Grayscale Bitcoin Trust share has widened its discount relative to the underlying cryptocurrency held in the fund, the highest margin ever since its debut in 2013. Digital Currency Group’s flagship GBTC shares traded at a discount of 35.8% to net asset value (NAV) today.

Digital Assets

Crypto lender Nexo investigated by 8 US state regulators

State securities regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont are investigating crypto lender Nexo for allegedly failing to register its Earn Interest Product.

Metaverse Gaming NFT

Astar Network’s ad features 329 top brands to support Web3 in Japan

Blockchain innovation hub Astar Network is making strides in promoting the Web3 adoption worldwide. In yet another milestone, the smart contracts platform has run a national newspaper ad in Japan that set a new global record with participation from 329 blue-chip firms.

Digital Assets

Pyth Network welcomes onchain data from crypto market maker Auros

“By sharing our high-frequency trading data with a truly onchain decentralized network, we aim to foster innovation that will lead to better financial solutions for all participants.”

Digital Assets

Tokeny integrates Ownera to boost liquidity of tokenized assets

“The adoption of FinP2P will result in higher liquidity and better access to capital and assets by providing regulated firms with one secure point of connection to multiple digital asset networks across the globe.”

Digital Assets

BingX launches subsidy vouchers to cover user losses in copy trading

“With the introduction of copy trade subsidy vouchers, new users can easily try out trading strategies without incurring losses.”

Digital Assets

Talos expands sales team: Frank van Zegveld, Matt Houston, Hillary Conley

“The extensive leadership and industry expertise of these new hires will enable us to build long-lasting relationships as we continue to build out our global presence in EMEA and beyond.”

Executive Moves

FX and CFD broker Emporium Capital hires industry veteran Robert Woolfe as COO

His past experience within the FX and CFD industry includes top roles at Capital Index, London Capital Group, GKFX, ETX Capital, and IG.  “I’m delighted to be part of the Emporium Capital team and spearheading the brokerages global expansion plans”, he said about the appointment.

<