CySEC flags Metexo, InstaForex clone, ETFX as scams

abdelaziz Fathi

The Cyprus Securities and Exchange Commission has once again stepped up its fight against unauthorized brokers.

The Cypriot regulator today published a warning against a slew of unlicensed providers, whose domains were just blacklisted for facilitating trading in FX and cryptocurrencies without being authorized to do so in the country. CySEC also sounded alarm bells after it spotted a fraudulent scheme imitating brand of regulated FX broker InstaForex.

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:

  • metexo.com
  • inforexeu.com
  • et-fx.com
  • nbimarkets.net
  • emporiumcapital.ltd

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 lose 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.

As CySEC’s attitude of adopting more stringent licensing guidelines and operating regulations becomes ever clearer, certain aspects of the rules and operations start to come into sharper focus.

Among those is what the regulator calls the requirements to provide investment and ancillary services and/or perform investment activities in a third country.

CySEC  sent a circular to its regulated brokers, in which it mentioned some basic rules that every broker has to obey. According to the watchdog, onboarding overseas clients now requires a broader set of features and the presence of an active regulatory approval to ensure soundness of operating in another jurisdiction.

However, the Cypriot regulator has opened both doors – flexibility in its legal requirements as well as the ability to restrict the CIF’s access to provide investment activities in a third country.

As such, the Cyprus Investment Firms (‘CIFs’) must now assess their existing third-country-passports and secure official documents to either confirm that they hold relevant authorisation, or to be granted relief from the obligation to hold such a licence in that territory.

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