German watchdog investigates GTS Financial over regulation claims

abdelaziz Fathi

Germany’s top financial regulator today warned of the dangers posed by offshore brokers that continue to chase online trading  business, including within the gray area of the country’s CFDs sector.

BaFin has specifically marked another firm with the red flag. The independent regulator highlighted that a company called GTS Financial is running an illegal business while having not acquired proper authorization. The firm under BaFin’s firm offers German customers CFDs that allegedly give them exposure to FX and cryptocurrency instruments.

According to the BaFin’s intel, the regulator suspects GTS Financial to be a suspicious company as it claims registration by the US Securities and Exchange Commission in an effort to deceive the public. It also refers to additional alleged business addresses the US, Denmark and Belgium.

This gives the impression that it is legitimized in the Germany, which has never been true. Either way, the financial regulator further urged its citizens to be careful and follow due verification processes, check the company’s identity (identity details, country of establishment, etc.), and never to trust a company if it cannot be clearly identified.

The company goes even far with its pledges on its website, stating that it offers powerful strategies that make trading with them outstandingly risk-free.

BaFin turns eye to social media

“GTS Financial LLC contacts German investors and recommends specific shares. The company also operates a trading platform with the following domain: gtsfinancial.net. In accordance with section 37 (4) of the German Banking Act (Kreditwesengesetz – KWG), BaFin would like to make clear that GTS Financial LLC, USA, has not been granted authorisation under the KWG to conduct banking business or provide financial services. The company is not supervised by BaFin,” the statement reads.

To prevent such practices, BaFin issued several guidelines that encourage potential investors to be wary of promises of disproportionate returns. A guaranteed investment with a high return that considerably exceeds the market return is often too good to be true, it says.

In an attempt to keep up with the rise of the crypto market, including the number of trading platforms and users, BaFin has been adamant in its warnings toward investors, elaborating on the potential risks associated with the booming industry.

The financial regulator has also delivered a stern warning against unchecked traders that are using flashy social media profiles to trick inexperienced persons into thinking they can trade online and make thousands in no time.

These warnings were in response to a rise in unregulated trading signals on online forums, and a concern that retail investors are not aware of the risks associated with following such tips, BaFin said.

While these bogus profiles advertise get-rich-quick schemes, they do not even have a website and operate solely on social media channels, including Instagram, Facebook, or WhatsApp.

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