CFTC wins entry of default against $700K FX scam

abdelaziz Fathi

The United States Commodity Futures Trading Commission (CFTC) has managed to secure a clerk’s entry of default against Tradewale LLC and Tradewale Management Fund, an allegedly fraudulent FX scheme.

The defendants were duly served with the summons and complaint in the action brought by the CFTC but has failed to plead within the time prescribed by the law.

Earlier in September, the derivatives markets regulator 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 US 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.”

CFTC actively targeting trading scams

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.

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

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