CFTC slams 14 forex, binary option brands over false registration claims
The Commodity Futures Trading Commission (CFTC) has come down hard on 14 FX and binary options platforms for falsely claiming registrations with the US regulators.
According to the CFTC, many of these foreign entities are acting in a capacity requiring them to be registered with a federal agency. Registration allows the watchdog to provide greater security and oversight of the industry by examining whether firms meet minimum financial standards as well as disclosure, reporting, and recordkeeping requirements.
The US derivatives regulator identified 12 binary option brands that fraudulently touted to retail investors that they sell regulated products based out of New York. However, none of these entities have ever registered as a futures commission merchant (FCM), the agency said.
According to the regulatory manifest, the following brands have published misleading claims of having CFTC registration:
- Smarter Signals
- Prime Expert Trade
- Star Fx Pro
Additionally, the CFTC’s complaint further charges Climax Capital FX and Digitalexchange24.com of offering financial services in the US without being authorized to do so. Both companies fraudulently sought clients by lying about their respective market position and investment licenses. In particular, their websites referenced CFTC registration or National Futures Association (NFA) membership.
To cover up their fraud, Climax Capital FX says it maintains offices in Walsall and Houston, while Digitalexchange24.com is allegedly located in Arkansas. The regulatory body, however, states that the companies’ US addresses are invalid, although they may be using the details of legitimate entities to mislead investors.
“In these two complaints, the false claims are similar. Each complaint alleges that each entity falsely claimed that it “is a registered FCM and RFED with the CFTC and member of the [NFA]” and provided the same NFA ID number. As alleged in the complaints, these entities have never been registered with NFA in any capacity, and according to an NFA database, the NFA ID number identifies an individual who was once registered with the CFTC but has been deceased since 2009,” the statement reads.
Right now, the CFTC is aiming for trading and registration bans and injunctions against further violations of its regulations and federal commodities laws.
The CFTC has been active recently in its cleanup of the forex space with charges being brought against a dozen of brokers and trading apps. The crackdown was even extended to regulated platforms, having hit OANDA Corporation with a $500,000 fine for failing to adhere to certain regulations, including that it failed to meet minimum capital requirements.
Gain Capital UK was also ordered to pay a civil penalty of $250,000 over allegations it signed up US investors to its FX trading platform.