Cypriot regulator withdraws authorization of FX firm Daweda Exchange

Maria Nikolova

Daweda Exchange did not take the necessary steps to safeguard the URL of www.daweda.com, from being used by a different entity – Daweda Ltd (BVI).

Several months after the Cyprus Securities and Exchange Commission (SEC) suspended the Cyprus Investment Firm authorisation of Daweda Exchange Ltd, the regulator has announced its decision to wholly withdraw the CIF authorization of the FX firm.

The decision reflects the company’s non-compliance with article 25(1) of the Law, as it did not act honestly, fairly and professionally when providing investment services to clients, in accordance with the best interests of its clients.

More specifically, CySEC has found that Daweda Exchange did not take the necessary steps to safeguard the privately owned URL (domain) of www.daweda.com, from being used by Daweda Ltd (BVI). Evidence supports that Daweda Ltd (BVI) was using the email address [email protected], in order to send to its clients their login ID and password information to connect to the MT4, thus giving the impression that they were clients of the Cyprus Investment Firm Daweda Exchange Ltd.

Daweda Ltd (BVI) and Daweda Exchange Ltd do not belong in the same group of companies.

The company will have to:

  • Ensure it does not provide investment and ancillary services.
  • Immediately and without delay, ensure that all references in its websites and anywhere else, relating to the provision/carrying out of investment services/activities, as well as references to its licensing and regulation by the CySEC, are deleted.
  • Return all funds and financial instruments which belong to/are attributable to its clients, including any profits.
  • Examine and resolve any clients’ complaints/reports filed against the CIF.

Furthermore, CySEC announces that, at its held on May 13, 2020, it decided that the Executive Members of Daweda Exchange’s Board of Directors, Hamed Sepasdar Tehran and James Cabrera, have not complied with article 10(1)(a) of the Law, since, at the material time and while they were members of the board of directors of the company, they did not define the governance arrangements that ensure the effective and prudent management of the CIF, in a manner that promotes the integrity of the market and the interest of clients. In particular, they did not comply with the principle of article 10(1)(b)(iv) of the Law, since they did not supervise effectively the senior management of the company.

CySEC has decided, pursuant to article 71(6)(d) of the Law, to impose a temporary ban on Hamed Sepasdar Tehran and James Cabrera. They are prohibited from exercising management functions in CIFs for a period of six months.

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