CFTC charges Tradewale of pocketing $700K via FX scam

abdelaziz Fathi

The Commodity Futures Trading Commission today levied an action against Tradewale LLC, its UK associated managed fund and its principal, Valdas Dapkus, over fraudulent offerings related to a forex scheme.

The defendants told victims that they would use pool funds to trade currencies, according to the complaint, filed in the U.S. District Court of New Jersey.

Through its website, tradewale.com, as well as various social media platforms, Tradewale raked in more than $700,000 by misrepresenting their software’s effectiveness.

The claims to bolster the credibility of their “unique trading system” included that it relies on artificial intelligence algorithms with a proven track record to trade forex. They also touted returns of 4% – 11% a month and average yearly returns of over 55% with “minimal risk.”

Furthermore, in their solicitation materials, the defendants never included the hypothetical disclaimer required by CFTC regulations, which plainly states, “the results are based on simulated or hypothetical performance results that have certain inherent limitations.”

Tradewale defrauded investors through a variety of false advertising campaigns. In these campaigns, the marketers promoted fake success stories that encouraged the users who viewed them to sign up for their platform. The fake account statements also lured victims into believing their investments were paying off.

“Although Tradewale’s solicitation materials claimed that accounts could be “easily accessed,” most, if not all, U.S. customers of Tradewale were never able to withdraw funds from their accounts. Instead, the defendants misappropriated customer funds for unauthorized purposes, including misappropriation of funds in bank accounts Dapkus established and for which he was the sole signatory,” the CFTC explains.

This is a common tactic among fraudulent brokers, with victims investing a significant amount of money as the company will allow small withdrawals, but if they try to make a significant withdrawal, the company will cut off contact.

Tradewale is also charged with acting as a commodity trading advisor without registering with the commission.

In addition to the fiscal penalties, including full restitution to defrauded investors, the commission is looking to impose a number of injunctions against Tradewale and its operatives that will prevent them from doing any sort of commodities business again.

The U.S. regulator has been actively ‎targeting firms and individuals involved in the illegal ‎‎trading and fraudulent activity.

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