CFTC takes PaxForex to Court for offering FX services without registration

Maria Nikolova

Laino Group Limited d/b/a PaxForex is illegally soliciting or accepting orders for leveraged retail off-exchange forex, precious metals, and digital asset transactions from US customers without being registered with the CFTC.

The United States Commodity Futures Trading Commission (CFTC) on Thursday filed a complaint against Laino Group Limited d/b/a PaxForex alleging that the company is offering services without having the necessary registration.

According to the CFTC Complaint, submitted to the Texas Southern District Court, PaxForex operates a website and trading platform, www.paxforex.com, which allows customers to trade commodities ranging from foreign currencies and precious metals to certain digital assets including ether, litecoin, and bitcoin. The complaint alleges that PaxForex is illegally soliciting or accepting orders for leveraged, margined or financed retail off-exchange foreign currency, precious metals, and digital asset transactions from U.S. customers without being registered with the CFTC, as required.

The CFTC Complaint alleges that, from at least March 2018 through the present, PaxForex has conducted a business in the United States in a manner that violates Section 4(a) of the Commodity Exchange Act (“Act”), 7 U.S.C. § 6(a) (2018): by soliciting or accepting orders from non-eligible contract participants (“non-ECPs”), not conducted on or subject to the rules of any Commission-regulated exchange, for the purchase or sale of gold, silver, ether, litecoin, and bitcoin on a leveraged, margined or financed basis that does not result in actual delivery of the commodities to the customer.

Further, without registering with the Commission as a futures commission merchant (FCM), PaxForex, in or in connection with forex and retail commodity transactions, accepts money, securities, or property (or extends credit in lieu thereof) in the form of bitcoin or other assets, to margin, guarantee, or secure trades or contracts that result or may result therefrom, in violation of Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1) (2018).

The CFTC seeks to enjoin the defendant’s unlawful acts and practices, to compel compliance with the Act, and to further enjoin the defendant from engaging in any commodity-related activity. In addition, the Commission seeks civil monetary penalties and remedial ancillary relief, including but not limited to, trading and registration bans, disgorgement, restitution, rescission, pre-judgment and post-judgment interest.

Read this next

Industry News

SEC Chair Gensler pitches for regulation of crypto exchanges; will Ripple benefit?

In what can be perceived to be a big boost for the crypto community, Gary Gensler, the newly appointed chairman of the Securities and Exchange Commission (SEC) has asked the Congress to look into crypto regulation.

Industry News

Baton Systems integrates with LCH for automation of collateral workflow

Baton Systems, a provider of post-trade solutions for financial markets, has announced its integration with LCH, a leading clearing house, for automating the end-to-end collateral workflow for participants in the derivatives markets.

Industry News

CBOE Expands Its European Team with Hiring of Senior VP

CBOE Europe, a pan-European exchange operator and which is a part of CBOE Group based in the US, has expanded its European team with the hiring of Natan Tiefenbrun as its Senior Vice President, Head of European Equities.

Retail FX

London C-level executive market on fire: Tickmill, you’re up

Mukid Chowdhury is now the face of Trading 212. This, however, has left a newly vacant seat. Now, it’s Tickmill’s turn to fight for a Chief Financial Officer. The C-level executive market in London is on fire at the moment.

Industry News

Sapien Capital: FCA fines £170k for allowing Solo Group’s money laundering

The role of Sapien Capital is that it executed purported OTC equity trades to the value of approximately £2.5 billion in Danish equities and £3.8 billion in Belgian equities.

Industry News

MAS invites all fintechs to apply for green tech accelerator

Fintechs should aim to solve at least one of the three key challenges proposed by MAS: (i) Mobilising Capital; (ii) Monitoring Commitment; and (iii) Measuring Impact.

Technology

LSEG tests DCM digitization platform developed with Nivaura

This issuance marks an important milestone in capital markets automation and digitization and demonstrates the potential of such platforms to improve current capital market workflows.

Industry News

Archegos Capital prepares for insolvency proceedings

Archegos Capital, the troubled capital management firm, is preparing for insolvency proceedings as banks that handled its funds are trying to recoup their losses from it.

Inside View

FinanceFeeds announces interview and media opportunities at IFX EXPO

After a tough year for much of the world and the FX industry, Ultimate Fintech has announced the first in-person B2B event of the year – IFX EXPO Dubai.