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.

Read this next

Retail FX

Pepperstone adds Capitalise.ai analytics and automated trading tools free of charge

“We look forward to bringing significant value to Pepperstone traders and making a real, positive impact in their daily trading habits. We are excited to welcome them on board.”

Retail FX

FP Markets wins Best Global Value Broker for 4th consecutive year at the 2022 Global Forex Awards

“We greatly appreciate the continued international recognition as at FP Markets we pride ourselves on these attributes and these prestigious awards are testament to the hard work from our global team to always provide our clients with the ultimate trading experience.”

Inside View

How to Engage Your Customer at Every Stage of Their Journey

As many as 89% of successful businesses say that providing assistive customer experiences is critical to their growth. That’s because a mere 5% increase in customer retention can boost profits by 25% to 95%.

Industry News

CFTC fines Chinese firms Chinatex and COFCO $720,000 for wash trading

Chinatex traders engaged in wash trading in order to liquidate a long position in the account of an affiliated company and re-establish the position in its own account, to the ultimate benefit of its parent company, COFCO.

Industry News

US-based operation of Brazilian broker XP fined $500,000 for recordkeeping failures

“Proper recordkeeping is vital to protecting our markets and market participants from fraud and manipulation. This case serves as another example of the Commission’s intent to vigorously enforce the recordkeeping obligations of its registrants.”

Digital Assets

Bitfinex announces integration of USDt on Polkadot

Polkadot is the brainchild of British computer programmer and Ethereum co-founder and former CTO Gavin Wood.

Executive Moves

FPG hires ex-Fireblocks Chris Hazelton to head marketing at crypto prime broker

“Chris’s experience as a marketing leader at several exceptional businesses will help us refine our message to an institutional audience that’s overwhelmed with new information and show tangible examples of how we’ve helped customers like them scale successfully in crypto.”

Podcasts

FinanceFeeds Podcast Ep. #6: Gold-i’s Tom Higgins talks efficiency in FX and inner workings of Crypto Switch

On its sixth episode, the FinanceFeeds Podcast welcomed Tom Higgins, the founder and chief executive of trading systems integration provider, Gold-i.

Digital Assets

Coinigy launches Crypto Screener Tool for spot, DeFi, and derivatives

“Traders can tap into a vast dataset covering the entire crypto ecosystem, which spans nearly a decade, to identify opportunities and act quickly. This is an essential tool for all active and professional traders, including day traders.”

<