Published: August 30th, 2020
The U.S. Commodity Futures Trading Commission (CFTC) recently updated the ‘RED List,’ a caution roll warning the public against unlawful binary options and FX firms. In the amendment, the federal agency included another 20 operators that it said are providing financial services illegally. The tally of unlawful firms now stands at 168.
The US Commodity Futures Trading Commission (CFTC) of the U.S. has updated its ‘RED List,’ a caution listing of foreign exchange and binary options firms that operate in the country illegally. The amendment adds another 20 firms to the list that warns the public against financial service providers offering products and services to the public despite their illegitimate status.
The CFTC’s Red List now has 168 firms, which it warns the public to avoid. The agency recently ramped up its cleanup exercises of the foreign currency trading space, bringing charges to several trading apps and brokers.
Last week, OANDA Corporation, a New York-based foreign exchange company, became the agency’s latest victim. The FX firm was slammed with a $500,000 fine for its failure to abide by several regulations, including failing to meet the minimum capital requirements.
In June, it slapped Gain Capital UK, a London-based institutional financial services provider, with a civil penalty of $250,000 because of allegations that the firm signed up American investors into its forex trading platform.
As a result of the CFTC’s claims, Gain Capital UK agreed to settle a fine of $241,671, and cease and desist from any further transgressions. The warning on Tuesday, August 25, is part of a continuous action within the regulator’s mandate of repressing illegal binary options operatives. CFTC responded with the move after a series of massive fraud cases in the industry came to light.
The Red List is an acronym for ‘Registration Deficient List,’ which mirrors a similar compilation of fraudulent and unlawful operatives kept by the AMF. AMF, or Autorité des marchés financiers, is the stock market regulator in France.
The lists guide investors in identifying unregistered foreign financial services providers that may be undertaking illegal activities.
The CFTC’s list contains binary options brokers and forex firms soliciting and or accepting investment capital from U.S. residents without the requisite registration and licensing from the relevant agencies. The CFTC’s position in the space is to provide transparency and protection for investors.
The CFTC said that most foreign firms operate in a manner that requires them to seek the agency’s registration and licensing. The agency added that the registration process enables the body to offer elaborate security and industry supervision.
The federal agency’s roles are to examine whether firms hold the required licenses and meet the set minimum financial standards of reporting, disclosures, and recordkeeping regulations.
The CFTC emphasized in the press statement that registration alone does not provide adequate protection against mismanagement and fraud. It added that unethical firms will always find ways of enhancing their wayward ways. However, the agency said that proper registration helps improve the industry’s levels of accountability and security.
Some of the brands that join the 150-strong list include Allegra Markets and IDB Traders that operates under the name Baltic Concert LLP. Other new entrants to the list are Capital 245, MM Financial Experts, Coinexx, Crown Finance, Omega Crypto, EagleFX, and Omega Capitals.
Other errant forex firms are Platin CFD, Richmond FG, Easy Line Pro, F1 Trade, Top Option 360, Trade GF, FX Trader, and Turnkey Forex. FXVIP, Global Capital Options, VIP Businesses, Grand Trade FX, and Wellington INV, which trades as Bali Limited, have also made it to the RED List.
In early December 2019, the agency updated its list with about 20 binary options and forex brokerage websites that it said were operating illegally. In the previous warning referred to here, the agency cautioned several firms that it said solicited and accepted funds from U.S. residents without obtaining the necessary registrations as Futures Commission Merchants (FCM) and Retail Foreign Exchange Dealers (RFED).
At about the same time, the Australian Securities and Investments Commission (ASIC) flagged three possible scams. The forex operators that the Australian body pointed out were Fibonetix, CG Capital Group Limited, which traded as BlueLexus, and UCI-Limited. The three have since been established to be unlicensed scam brokers and have wound up their operations.
Back when ASIC cautioned the Australian public about the three firms, the body advised Australians not to deal with the businesses because they did not have the required registration and licenses.
ASIC had accused the three firms of making unsolicited calls and sending emails offering investment and financial advice to Australia residents. Further, the firms provided loans and credit though they held neither valid credit licenses from ASIC nor Australian Financial Services (AFS) authorization.
Offshore binary options brokers and forex firms have been a thorn in the U.S. financial regulator’s flesh for some time now. In 2015, the agency launched the RED List, initially as a website, to specifically carry alerts about unregistered and unlicensed foreign firms that seek investment from the American public.
The Red List came to complement CFTC’s other initiatives that fight financial fraud, such as SmartCheck. CFTC and its counterpart, the U.S. Securities and Exchange Commission (SEC), have been at the forefront in warning the American public about fraudulent schemes that involve binary options.
Because of their all or nothing nature, binary options are an easy way for scammers to steal from the unsuspecting public.
The US Commodity Futures Trading Commission (CFTC) has updated its RED List again. This time around, the agency has included the names of 20 forex brokerage and binary options firms. It warns that the mentioned companies are soliciting business among the American public without the requisite licenses. The federal agency cautioned the public against doing business with these offshore firms.