CFTC secures permanent injunction order against unregistered Forex broker JAFX

Maria Nikolova

Offshore brokerage JAFX is prohibited from acting as or offering to be the counterparty to forex transactions.

Judge Jill N. Parrish of the Utah District Court has signed an Order of Permanent Injunction and Other Statutory and Equitable Relief Against unregistered retail Forex firms JAFX, LTD aka JAFX, EOOD. In July last year, the United States Commodity Futures Trading Commission (CFTC) brought an action against these entities which claimed to be operating from St. Vincent and the Grenadines, as well as Bulgaria.

Back in July, the CFTC sought injunctive and other equitable relief, as well as the imposition of civil penalties, for violations of the Commodity Exchange Act and the Commission’s Regulations. Specifically, the CFTC complaint charged JAFX with operating as an unregistered foreign exchange dealer, and failing to provide customers with the required Risk Disclosure Statement.

As per the latest Court filings, to effect partial settlement of the matters alleged in the complaint, JAFX has consented to the entry of a Consent Order of Permanent Injunction and Other Relief Against JAFX, LTD. aka JAFX, EOOD.

Beginning in at least September 2015 and continuing to the present JAFX, using the website http://www.JAFX.com and videos on YouTube, is, or has offered to be, the counterparty to leveraged, retail FX transactions for customers located in the United States who are not Eligible Contract Participants (ECPs), without being registered with the Commission as a retail foreign exchange dealer (RFED).

While the website contains language noting that the solicitations are “not directed at U.S. customers,” there is nothing in the online account application stating JAFX does not accept US customers, nor are US customers prevented from opening accounts. The application process contains a drop-down menu of companies from which JAFX accepts customers; the first country listed is the “United States.” U.S. customers may open an account with JAFX with as little as $100.

Furthermore, JAFX’s online account application does not seek any information about prospective customers’ ability to send or receive actual delivery of forex or customers’ business need for Forex.

Throughout the relevant period, each time JAFX opened an account for a retail forex customer to engage in retail forex transactions, it failed to provide each retail forex customer with a written Risk Disclosure Statement.

The CFTC has also alleged that JAFX neither advises actual and prospective US customers in its solicitations that JAFX is required to be registered with the Commission as an RFED, nor does JAFX advise actual and prospective customers that it is acting unlawfully by operating as a RFED in the US without such registration. In the FAQ section of the website, JAFX appears to acknowledge its unlawful conduct by stating: “JAFX is currently not regulated. Regulation takes a very long time to setup and we are in the process of applying for regulation.”

Under the Consent Order, JAFX is, among other things, permanently restrained, enjoined and prohibited from soliciting or accepting orders from U.S. resident non-ECPs in connection with leveraged or margined forex transactions and acting as or offering to be the counterparty to the forex transactions. The companies are also prohibited from opening retail Forex trading accounts for US resident retail customers without providing customers a written disclosure statement with the disclosures.

JAFX is also permanently restrained, enjoined and prohibited from trading on or subject to the rules of any registered entity, as well as from entering into any transactions involving “commodity interests”, for its own personal account or for any account in which it has a direct or indirect interest. It also prohibited from having any commodity interests traded on its behalf.

JAFX shall pay disgorgement, plus post-judgment interest, to the CFTC. The amount of disgorgement and civil monetary penalty will be determined by the Court.

Read this next

Retail FX

Financial Commission adds FX broker Bold Prime to membership roster

The Financial Commission today announced that it has added Bold Prime to its member roster, which is made up of online brokerages operating in FX, derivatives and cryptocurrency markets.

Digital Assets

Despite crypto winter, Cake DeFi paid out $58 million in Q2 rewards

According to its latest ‘Transparency Report,’ Cake DeFi continued its growth trajectory in the three months through June 2022, even as the entire crypto industry experienced macro challenges this quarter.

Retail FX

SimpleFX Review: Cryptos, Spreads, Pros & Cons

SimpleFX combines years of Forex and cryptocurrency experience with a focus on offering resources to retail traders. 

Retail FX

Ironbeam becomes CME clearing member and launches MT5

“The direct clearing aspect along with our low-latency proprietary trading tools and technology solutions make Ironbeam the ideal trading destination.”

Institutional FX

Top 0.07%: oneZero makes it to Inc. 5000 of fastest growing companies in America

oneZero started out by serving the foreign exchange trading community, developing and executing technology that could scale with the growth of the FX market.

Industry News

CFTC wins case against broker for secretly taking other side of client orders in block trades

“As we said at the outset of this case, the illegal use of inside or confidential information undermines confidence in markets and will not be tolerated.”

Technology

BankiFi raises $4.8m to bring embedded banking platform to North America

“Our mission is to make all aspects of cash management and payments easier for SMBs everywhere, and this investment is another huge step to making that a reality.”

Executive Moves

Shieldpay hires ex-Payoneer Chris Andrews as Head of Sales

“We’ll be expanding our position in existing markets and accelerating growth into new verticals, whilst building on our direct and indirect channels.”

Digital Assets

Crypto.com secures preliminary approval to operate in Canada

Crypto.com, one of the longest-established crypto platforms, has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ with the Ontario Securities Commission (OSC) in Canada.

<