CySEC flags HYCM Bot, BrokerCreditService as unregulated platforms
The Cypriot regulator today has warned against entering into transactions, particularly involving CFDs, cryptocurrency and forex trading, via online trading platforms operated by unlicensed providers.
The Cyprus Securities and Exchange Commission said before that some of these illegal brokers were just spinoffs of previously shuttered companies while others misleadingly claim affiliation with other brokers that are already regulated in Cyprus and hold its CIF License. The watchdog has blacklisted the following domains:
One of the blacklisted brokers, HYCM-BOT, has been posing as the UK-based FX trading brand, HYCM. HYCM is the global brand name of Henyep Capital Markets (UK) Limited, HYCM (Europe) Ltd, Henyep Capital Markets (DIFC) Ltd and HYCM Limited, a global corporation founded in 1977, operating in Asia, Europe, and the Middle East.
The copycat brand claims to operate entities authorised and regulated locally by the UK’s Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC). As of the time of publication, the shady website has taken down all website pages and the aforementioned link only leads to the member login page. It’s not clear if the site was taken down as a result of the warning or leading up to it.
CySEC stresses that these firms are not licensed to operate a brokerage business in Cyprus, nor are they affiliated with a regulated entity. Additionally, it warns that if consumers lost their money on platforms that are not licensed, they are not protected under the Investor Compensation Fund (ICF). This serves to protect the claims of covered clients and provide them with compensation in case a member was unable to meet its financial obligations.
While many providers claim to be Cyprus-based, CySEC said, previously it believed such companies were based overseas and providing false addresses, adding that it would look into taking further action if companies were actually based within the country. It further explains that it is sometimes hard to find the names of the platforms’ operators on their websites, and that the addresses given as the company headquarters are often offshore letterbox addresses.
Under current laws, CySEC has no powers to force internet companies to refuse financial advertisements or block access to their domains. It can only ask them to take down fraudulent promotions once they have been spotted. As a result, fraudsters and promoters of high-risk schemes have been able to place advertisements claiming to be based or licensed in Cyprus.