Discourse grows and FCA powerless in aftermath of Easytrade.biz demise

The Easytrade.biz scam has once again alluded to the ineptitude of regulators to stop unregulated firms ripping off clients, and raises the question as to why they keep poking good quality firms instead


There is no question that the level of sophistication among FX traders and the development and maturity of the retail FX industry’s small to medium brokerage sector are both significantly more advanced than just ten years ago.

The level of awareness among retail customers and the continual evolution of retulatory technology and structural requirements have developed alongside the hardworking commitment of FX brokerage executives who have been at the forefront of adaptation and change in order to ensure a good quality sustainable future.

It could well be considered that the OTC derivatives business is one of the most advanced and rapidly developing sectors in the entire financial markets industry worldwide and is responsible for some of the most leading edge initiatives in technology and customer experience that filter down into other areas of the business.

Whilst this is most certainly very good and has come as a result of huge effort on the part of brokers, technologists and regulators, there are still some examples of ineptitude on the regulator’s part, and in the case of Estonian electronic trading pariah Easytrade.biz more than a degree of haplessness has taken its toll on customers.

The Financial Conduct Authority (FCA) has a very good reputation indeed, however it is perhaps of merit to consider that its reputation as a good quality world leading regulator may well not be as a result of its own prowess, but more as a result of London’s extremely high quality, world-leading financial markets industry which has earned its prestige via a 300 year legacy of institutional domination which has led to a modern era of world class electronic markets providers ranging from non-bank market makers to hedge funds and vast wealth managers, to institutional FX providers, vast publicly listed domestic market brokers and FinTech leaders in everything from exchange technology to challenger banks.

Thus, it is the industry participants that have created the air of respectability and global leadership and the FCA benefits from the halo effect.

In the case of Easytrade.biz, the firm was unlicensed and operated from its base in Tallinn, Estonia, a very longstanding city of choice for unregulated, under-the-radar brokers with more than a few grab-it-and-run stories having emanated from there.

This week, with the firm’s website now out of action, retail customers who had experienced a cold shoulder when requesting withdrawal of their funds have now got extra cause for concern whilst the FCA is powerless.

Among other regions, Easytrade.biz had illegally targeted customers across Northern Europe, with several people in Britain having fallen foul of teh firm’s activities.

One customer told British consumer affairs personality Tony Hetherington “I foolishly agreed to invest with Easytrade.biz. I have asked for my account to be closed and the money returned to my M&S credit card, but have been ignored.”

Mr Hetherington elaborated on his perspective which was “Easytade.biz is a scam. But don’t just take my word for it. It is run by a limited company called Grau International, registered in Tallinn, Estonia.”

“The authorities in Estonia have warned that it is trading illegally, with no investment licence. The picture gets darker. Grau International is registered to a Dutch citizen named Floris Waals, who is the director of another Estonian firm called TRSystem, and in October last year our own Financial Conduct Authority issued a public warning against TRSystem” he said.

Indeed, Mr Hetherington is onto something which should be taken into account by retail traders, that being the often used practice of using a series of different company names to hide the origins of the brand or prevent recourse when they finally run away with the money.

However, the warning issued by the FCA is all the FCA did. The regulator did not instruct the government to block the IP address of their website, or issue a notice to Google to de-index Easytrade.biz site to a UK audience, and did not actively prevent the firm operating in the UK and order refunds to customers.

A cursory notice on the FCA site is hardly ever read by anyone and is ineffective. Surely, this whole thing is an insult to high quality, regulated brokerages that do everything they can to ensure that they abide by rules including trade reporting obligations (a very tech-heavy and resource hungry process post MiFID II), perform proper execution and ensure that their clients are provided with fully comprehensive customer service from highly knowledgeable staff.

Quite simply, regulated firms are subject to these parameters and have been unfairly beaten down by CFD and FX product reform regulation on top of these operational aspects, when unregulated miscreants from third tier jurisdictions with the intention of running away with client funds are allowed to run amok.

Easytrade.biz website is now offline


Mr Hetherington addressed this particular customer with this opinion “The company promised ‘vast resources’, ‘practical expertise’ and ‘an unforgettable trading experience’. Well, the last one was true.”

“As for everything else, it could not legally deliver what it offered. You were sucked in when its advert popped up on Facebook and an Easytrade.biz salesman said he would make investment decisions for you.”

Interestingly, Easytrade.biz had been using two Cyprus based companies to collect client money, called Finmarket and Fxplace. Many customers of Easytrade.biz had never heard of these companies and when attempting to make a chargeback on their credit card due to the impotence of the regulator or ombudsman when dealing with unregulated entities, banks had told customers that the payments had been made to these entities and not handled by Easytrade.biz which is who their contract was with.

Layering such as this is commonplace among unregulated brokerages, and with today’s technology there is every tool available for regulators to put a stop to the damage they do to our industry. The US and Australia are very good at dealing with that type of activity, whereas the rest of the world is not. CySec and the FCA can simply say that these firms are not regulated, therefore there is no regulatory censuring, thus putting the blame in the hands of the client and only being able to censure regulated firms which behave themselves anyway.

It has always appeared contrary that the FCA can censure a large firm such as IG Group which has a loyal, longstanding customer base across Britain, is publicly reporting and never puts a foot wrong, yet fraudsters with no license are considered not under the remit of the regulator and can therefore fo whatever they place. Surely the purpose of a regulator is to achieve quite the opposite.

The customer who had contacted Mr Hetherington for advice had lost £1149 with Easytrade.biz, and had been told by M&S Bank which is the bank that issued the card that the customer used to make the deposit to Easytrade.biz was not responsible because the payments had been made not to Easytrade.biz but to the two companies that it uses to take deposits.

M&S Bank told Mr Hetherington that no reclaim was possible, as the client had transferred cash and had not purchased any goods or services.

“I argued that you had never authorised payments to the Cypriot firms. In any event, you had bought services from Easytrade.biz that had not been delivered” said Mr Hetherington.

“I asked M&S Bank to say whether merchants were allowed to ‘front’ for firms acting illegally – in effect laundering money for them. I did some further digging and found that Fxplace also collects cash for a firm called Trade Capital Investments, which has been condemned as unlawful by Swiss watchdogs” he said.

“Additionally I found that it takes in funds for the equally unauthorised and illegal Instafx24 – which the FCA warns against. M&S Bank told me that if I wanted to argue this point, I would have to contact the Cypriot firms’ bank” he said.

If only the powers that be would do what they are supposed to do, that being to protect customers from deadbeats such as this instead of continually inventing new ways to clip the wings of the legitimate companies that are doing their best to lead the FX industry forward.


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