Have the authorities finally caught up with 4XP spinoffs FXTG and SkyFX?

Just one week after the Australian Securities and Investments Commission (ASIC) reported that retail FX brokerage FXTG had requested voluntary suspension of its AFS license, its sister company SkyFX is now the subject of a mandatory license suspension by CySec.

SkyFX is based in Cyprus, and was established initially as a brand name and trading style of Trademarker (Cyprus) Ltd which alongside SkyFX, operates Capital Option, its binary options brand.

FXTG and SkyFX were established initially as subsidiaries of Dealserv, which was the service provider that operated the unregulated and now defunct retail FX trading brand 4XP (formerly Forex Place) in Israel.

At the time of the demise of 4XP, the owners of the company sold Melbourne-based FXTG and Cyprus-based SkyFX as going concerns to Aviv Talmor, who then operated them alongside his existing brand UTrade which has been cited for alleged ponzi scheme activity by Israeli officials.

The decision by CySec to suspend the license of Trademarker, according to the ruling issued by the regulator, has been brought about by the fact that the company’s alleged violations of the Cyprus securities laws may possibly endanger the Company’s clients’ interests and generally the smooth operation of the capital market.

CySec has stipulated that SkyFX has 15 days to comply with provisions set forth by CySec, and during this period cannot provide or perform any investment services or activities, pursuant to section 26(5) of the Law. The firm must, if existing clients so wish, without being considered in violation of section 26(5) of the Law, close all open positions in relation to clients’ contracts, or of its own, on their maturity date or on an earlier date if the client so wishes and return to existing clients all of their funds and profits earned.

It is of great interest as to how these two companies are related, and taking a look at their origins will bear this out.

Back in 2009, Dealserv,  the company which provided services to retail forex brand 4XP (formerly Forex Place) looked to establish a regulated presence in a jurisdiction with a high quality regulatory structure. Initially, London was chosen, and the firm rented an office on Bishopsgate, in the City of London, and obtained a license from the Financial Services Authority (now the Financial Conduct Authority) in London.

The company employed a compliance officer, and operated the firm with skeleton staff for a number of months until its management, led by Yossi Herzog, decided to move the operations to Australia and hand responsibility to Yossi Ashkenazi, a former salesman for Herbalife.

The firm opened operations in Melbourne, renounced its FSA license in London and gained an ASIC license. Mr. Ashkenazi worked very closely with the management team at 4XP and Dealserv during that particular time.

Just a matter of months later, Dealserv recruited Jonathan Frankenstein as Chief Compliance Officer, based in Israel at Dealserv’s head office. In 2011, Dealserv established SkyFX under the commercial name of Trademarker, in Limassol, Cyprus, and appointed Mr. Frankenstein as CEO.

Mr. Frankenstein reported directly to 4XP management until such time that 4XP and Dealserv ceased its operations, owing several million dollars to clients, at which point FXTG and SkyFX were purchased by Aviv Talmor, owner of UTrade.

Mr. Talmor appointed Stavro D’Amore as CEO of FXTG whilst Mr. Frankenstein remained CEO of SkyFX until May 2015, when he left to become Executive Director of AJF Financial Services in Cyprus.

Mr. D’Amore left the firm resigned from his position as CEO in April 2015, the firm bringin in an interim CEO by the name of Elias Morales who stayed less than a month.

After the redundancy of most of the staff at FXTG, which included PR Director Tanya West and six account managers, Global Vice President Rafael Bar-Lev was pegged to relocate to SkyFX in Cyprus, however very little information has been forthcoming with regard to this.

It may well be that, after several years of smoke and mirrors, the end of the road is nigh for these firms and the unitary organization behind them.