BULLETIN: CFTC Conducts Major Sweep; 14 Forex Firms Accused Of Illegal Solicitation Of U.S. Citizens; Actions Filed In New York, Chicago, D.C. And Kansas City

BULLETIN: The Commodity Futures Trading Commission has gone to federal courts in New York, Chicago, the District of Columbia and Kansas City and simultaneously filed 14 lawsuits against Forex companies to enforce registration requirements and provisions of the Dodd-Frank Act.

One of the lawsuits — one filed in the District of Columbia against a Nevada company known as Kingdom Forex Trading and Futures Ltd. that claims to be a “legally registered company in Belize and Nevis” — alleges that the firm was not registered with the CFTC but that U.S. customers were instructed to send money via wire and credit/debit cards.  Money also can be sent by Liberty Reserve, a payment processor favored by online financial schemes. Liberty Reserve says it operates from Costa Rica.

The case against Kingdom Forex has been assigned to U.S. District Judge Rosemary Collyer, the same judge assigned to hear the AdSurfDaily autosurf Ponzi scheme cases.

This morning, Liberty Reserve was advertising on its website a company known as FXOpen.com. FXOpen.com, according to the CFTC, is the website of a firm known as FXOpen Investments Inc. — yet-another of the defendants sued in the sweep.

FXOpen is described in the complaint as “company of undisclosed origin” that claims “its headquarters is located at Ebene Heights No. 34, Cybercity Ebene, Mauritius.”

It also claims to have “worldwide regional offices” in Cairo, Egypt; Paris, France; Kuala Lumpur, Malaysia; Jakarta, Indonesia; Almaty, Kazakhstan; and Moscow, Russia, CFTC charged.

“FXOpen’s websites, including www.fxopen.com, are hosted on servers” in the United States, CFTC charged in the complaint.

The firm, whose website would not load this morning when visitors clicked the link at the Liberty Reserve page, is accused of directly soliciting U.S. investors and claiming U.S. law does not apply to it.

“[I]n the ‘Forum’ section of its website, FXOpen representatives specifically solicit United States residents to open accounts with FXOpen, in part by advertising that potential customers in the United States can escape United States laws and regulations by opening accounts with FXOpen,” CFTC charged.

“For example, on October 5, 2010, in response to a question regarding whether FXOpen could accept applicants from the United States after October 18, 2010 following recent CFTC rulings, an FXOpen representative answered with a post, stating, ‘Since we don’t have an office in the US, nor are we an affiliate of a US based broker, we are not bound by CFTC rulings. Rest assured we will be able to accept US clients for the foreseeable future unless a legal impediment appears,'” CFTC charged in the complaint.

All of the companies named defendants in the sweep are accused of “illegally soliciting members of the public to engage in foreign currency (forex) transactions and that they are operating without being registered with the CFTC,” the agency said.

Among the defendants are domestic and offshore companies.

Here is the lineup of defendants in what the CFTC described as a major nationwide sweep:

  • EuroForex Development LLC, a Delaware LLC.
  • FIG Solutions Limited Inc., a Delaware corporation.
  • ForInvest, a Delaware corporation.
  • FXOpen Investments Inc., a Delaware LLC.
  • FXPRICE, a Delaware LLC.
  • GIGFX LLC., a Delaware company.
  • InovaTrade. Inc., a company with purported offices in Florida.
  • InstaTrade Corp., d/b/a InstaForex, a British Virgin Islands company.
  • InvesttechFX Technologies. Inc., a Canadian corporation located in Toronto.
  • J&K Futures. Inc., a company with purported offices in California and New York.
  • Kingdom Forex Trading and Futures. Ltd., a Nevada company.
  • Prime Forex LLC, a Delaware LLC.
  • Wall Street Brokers LLC, a Delaware LLC.
  • ZtradeFX LLC, a Connecticut LLC.

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21 Responses to “BULLETIN: CFTC Conducts Major Sweep; 14 Forex Firms Accused Of Illegal Solicitation Of U.S. Citizens; Actions Filed In New York, Chicago, D.C. And Kansas City”

  1. This is interesting. Regarding the Instaforex entry, there is an Instaforex that has a thread on TalkGold that is based in Russia. Check out:
    http://www.talkgold.com/forum/showpost.php?p=3176924&postcount=1
    Their representatives are quite combative when asked about licensing.

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  2. This is interesting. Regarding the Instaforex entry, there is an Instaforex that has a thread on TalkGold that is based in Russia. Check out:
    http://www.talkgold.com/forum/showpost.php?p=3176924&postcount=1
    Their representatives are quite combative when asked about licensing.

    Hi laidback,

    The name of the website — instaforex.com — appears in Paragraph 19 (Page 6) of the CFTC complaint against InstaTrade Corp., d/b/a InstaForex, a British Virgin Islands company. I compared that with the name of the website in the instaforex thread at TalkGold. It is the same.

    In other words, the TalkGold thread references the same URL — instaforex.com — referenced by the CFTC in its complaint.

    http://cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfinstatradecomplaint012611.pdf

    BTW, the CFTC says instaforex accepts Liberty Reserve, Webmoney and Perfect Money.

    Thank you for the note, laidback.

    Patrick

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  3. Quick note:

    With all the recent bannings at TalkGold, I’m not sure if anybody will be left to post about the CFTC lawsuit in the thread.

    Patrick

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  4. Patick: We have our ways. Just not sure the post will not be deleted for Trolling. LOL!

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  5. Quick note: There is an instaforex thread at MoneyMakerGroup, too. No mention of the CFTC lawsuit as of this note.

    Patrick

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  6. Quick note:With all the recent bannings at TalkGold, I’m not sure if anybody will be left to post about the CFTC lawsuit in the thread.
    Patrick  

    Is now posted in InstaForex and FXopen threads which are both paid sticky threads at TG….
    FXOpenManager replied and said they were seeking legal advice….

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  7. Is now posted in InstaForex and FXopen threads which are both paid sticky threads at TG….
    FXOpenManager replied and said they were seeking legal advice….

    Thanks for pointing this out, Oskosh.

    Patrick

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  8. My guess is that Broker Jones heart rate went up this morning with this announcement. Either that or he crapped his pants wondering if Oceanside was next. Amazing how quiet he has become today. LOL!

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  9. Let me correct you. Not InstaForex was sued by the CFTC, but the former participant of our affiliate programme – Ztradefx. We confirm that Ztradefx engaged itself in InstaForex partnership program. These people were automatically registered on our website, hence they bear no other direct relation to InstaForex including absence of any signed agreements, contracts, etc. We regret that the aforementioned company (and only that signle company as Instaforex has never had any offices in the USA) got in trouble with the CFTC, but we consider this irrational to accuse the company in sins which belong to the participant of its partnership program.

    If any member of InstaForex partnership program steals a car it does not mean that a company stole a car.

    If any member of InstaForex partnership program meets with an accident it does not imply that a company met with an accident.

    If any member of InstaForex partnership program was claimed against it cannot mean that the company was accused.

    Our company does not have a representation office in the USA and does not plan to have it in foreseeable future. However, we confirm that any US citizen as any other person in the world can visit InstaForex website – it is the structure of the Internet. In this situation we only see the necessity of adding the warning for the US citizens of not being able to use our website. We need some time in order to find a due place for this notification.

    This is the policy of the US government – they protect their market against the foreign investments. We may not comment on this policy but we will reply to it by posting notification on our website.

    This participant of InstaForex partnership program WAS NOT active and it had no clients. We are certain that THE CLAIM IS ABSOLUTELY UNFOUNDED. We respect the CFTC’s decisions but we have to emphasize its groundless in this particular case: this member of the participant program was not even active. It has had only 3 clients during the whole period of participation in the partnership program and some of its clients were not even the US citizens.

    Best Regards,
    Alexandra Melyukhova
    PR manager
    InstaForex Company

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  10. Quick note: There is an instaforex thread at MoneyMakerGroup, too. No mention of the CFTC lawsuit as of this note.Patrick  

    We have just replied regarding this issue here http://www.moneymakergroup.com/Instaforex-Instaforexc-t217855.html&st=480#entry6391901

    Best Regards,
    Alexandra Melyukhova
    PR manager
    InstaForex Company

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  11. Not InstaForex was sued by the CFTC, but the former participant of our affiliate programme – Ztradefx.

    Alexandra,

    InstaForex’s name appears in the complaint, including in the caption. So does the name of Ztradefx, which you note is an affiliate of your company. If there is a technical error in the complaint/caption, perhaps CFTC will move the court for leave to amend the complaint. In my view, the core issue of soliciting U.S. citizens is not apt to change.

    We have just replied regarding this issue here http://www.moneymakergroup.com/Instaforex-Instaforexc-t217855.html&st=480#entry6391901

    MoneyMakerGroup is a well-known forum populated by serial purveyors of Ponzi schemes and other forms of fraud and criminality. MoneyMakerGroup’s name is referenced in court documents in the Legisi Ponzi scheme case filed by the SEC. Legisi is alleged to have gathered tens of millions of dollars from thousands of investors. The U.S. Secret Service used an undercover operative in the Legisi case, according to court filings.

    Meanwhile, MoneyMakerGroup’s name also is referenced in the criminal case filed against Nicholas Smirnow in the alleged PathwayToProsperity Ponzi scheme case filed by the U.S. Postal Inspection Service. Investigators say the Pathway To Prosperity scheme also gathered tens of millions of dollars. The global victims’ count is in the neighborhood of 40,000.

    It’s fair to say that MoneyMakerGroup has helped to spread Ponzi and fraud misery globally — really to every corner of the earth, with the possible exception of Antarctica. If InstaForex is getting business as a result of its participation or the participation of affiliates on MoneyMakerGroup, well, it’s hard to imagine that the proceeds it receives are clean. The money could be coming from HYIP schemes, autosurf schemes, Forex schemes, cycler schemes and other schemes.

    If any member of InstaForex partnership program was claimed against it cannot mean that the company was accused.

    Your money stream could be polluted by cash from any number of fraud schemes. That’s the ball MoneyMakerGroup and forums such as TalkGold set in motion. If U.S. federal agents or regulators freeze money from one scheme, it can have downstream consequences for other schemes. It also could lead to a situation in which the criminals and fraudsters actually ramp up their criminality and shady practices in order to make up for the losses caused by the seizures of proceeds in other schemes.

    If MoneyMakerGroup were a river, all the fish would be dead and the water would be poisoned with mercury and radioactive matter. The safety of any town near the river would be compromised because of all the floating and churning poisons — and the ability of banks to do legitimate business with people who lived near the river would be compromised because of all of the money made filthy and radioactive by the river.

    Because the MoneyMakerGroup river actually flows worldwide on the Internet, it can affect businesses from one side of the earth to another.

    Why are your company and its affiliates fishing in that river and even issuing news releases for people who frequent the river — despite its dangers — to see?

    This is the policy of the US government – they protect their market against the foreign investments.

    In my view, the U.S. government is protecting its markets against a dangerous river that is spreading cancer worldwide.

    We are certain that THE CLAIM IS ABSOLUTELY UNFOUNDED.

    How many U.S. customers from all sources does InstaForex have? How much access does InstaForex have to the U.S. banking infrastructure through wire tranfers, credit cards and relationships with payment processors?

    One of the reasons I ask is because of that MoneyMakerGroup river — the one whose shores and banks are lined with stinking, rotting fish of all shapes and sizes.

    Patrick

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  12. Quick note: The website of FxOpen, which Liberty Reserve was promoting as “Merchant of the Week” on the same day the CFTC sued FXOpen, still appears to be down.

    And Liberty Reserve still is featuring FXOpen in the “Merchant of the Week” promo on its website.

    Patrick

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  13. Instaforex also has a paid sticky thread on Talkgold in which it openly touts for business and its’ PR people regularly appear to deny suggestions it is trading illegally.

    If it walks like a duck and talks like a duck and has a paid sticky on Talkgold………then…………

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  14. The disclaimer posted by the Instaforex PR spokesperson is all fine and dandy, but, much as its posting here is appreciated, I think she would be better off telling it to the Judge.

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  15. Alexandra,InstaForex’s name appears in the complaint, including in the caption. So does the name of Ztradefx, which you note is an affiliate of your company. If there is a technical error in the complaint/caption, perhaps CFTC will move the court for leave to amend the complaint. In my view, the core issue of soliciting U.S. citizens is not apt to change.
    MoneyMakerGroup is a well-known forum populated by serial purveyors of Ponzi schemes and other forms of fraud and criminality. MoneyMakerGroup’s name is referenced in court documents in the Legisi Ponzi scheme case filed by the SEC. Legisi is alleged to have gathered tens of millions of dollars from thousands of investors. The U.S. Secret Service used an undercover operative in the Legisi case, according to court filings.Meanwhile, MoneyMakerGroup’s name also is referenced in the criminal case filed against Nicholas Smirnow in the alleged PathwayToProsperity Ponzi scheme case filed by the U.S. Postal Inspection Service. Investigators say the Pathway To Prosperity scheme also gathered tens of millions of dollars. The global victims’ count is in the neighborhood of 40,000.It’s fair to say that MoneyMakerGroup has helped to spread Ponzi and fraud misery globally — really to every corner of the earth, with the possible exception of Antarctica. If InstaForex is getting business as a result of its participation or the participation of affiliates on MoneyMakerGroup, well, it’s hard to imagine that the proceeds it receives are clean. The money could be coming from HYIP schemes, autosurf schemes, Forex schemes, cycler schemes and other schemes.Your money stream could be polluted by cash from any number of fraud schemes. That’s the ball MoneyMakerGroup and forums such as TalkGold set in motion. If U.S. federal agents or regulators freeze money from one scheme, it can have downstream consequences for other schemes. It also could lead to a situation in which the criminals and fraudsters actually ramp up their criminality and shady practices in order to make up for the losses caused by the seizures of proceeds in other schemes.If MoneyMakerGroup were a river, all the fish would be dead and the water would be poisoned with mercury and radioactive matter. The safety of any town near the river would be compromised because of all the floating and churning poisons — and the ability of banks to do legitimate business with people who lived near the river would be compromised because of all of the money made filthy and radioactive by the river.Because the MoneyMakerGroup river actually flows worldwide on the Internet, it can affect businesses from one side of the earth to another.Why are your company and its affiliates fishing in that river and even issuing news releases for people who frequent the river — despite its dangers — to see?In my view, the U.S. government is protecting its markets against a dangerous river that is spreading cancer worldwide.How many U.S. customers from all sources does InstaForex have? How much access does InstaForex have to the U.S. banking infrastructure through wire tranfers, credit cards and relationships with payment processors?One of the reasons I ask is because of that MoneyMakerGroup river — the one whose shores and banks are lined with stinking, rotting fish of all shapes and sizes.Patrick  

    The US have never been the major clientele of our company and never will be. Moreover, now we forbid registration of US accounts.

    Payments from US via banks and credit cards will not be processed. We also suspend opening new trading accounts for clients from the US – the decision regarding this issue has already been published.

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  16. The actions you have just described are generally known as shutting the gate after the horse is bolted.

    Changing the rules and/or ToS of a business to comply with the law, when is has not previously complied, does’t work. Andy Bowdoin of ASD already discovered this when he presented the Court with his Compliance Plan AFTER ASD had been raided by the authorities. Compliance with the law has to be in place from Day One.

    It is more than likely that InstaForex already know this, but it looks impressive to make a post like the one above and may convince a few “believers”. They will have a much harder time convincing the CTFC, who, contrary to popular ponzi promoter opinion, are neither dumb nor conspiring against legimate business.

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  17. Moneynakegroup is just another Internet source to us, that is used by traders as well. Their guilt has not yet been proved, thus the website continues to function. We are convinced that no one is entitled to blame us on employing a certain media channel to place our news. If you do not have anything against the comments we post on this forum, let us consider this issue settled.

    Best Regards,
    Alexandra Melyukhova
    PR manager
    InstaForex Company

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  18. Moneynakegroup is just another Internet source to us, that is used by traders as well. Their guilt has not yet been proved, thus the website continues to function. We are convinced that no one is entitled to blame us on employing a certain media channel to place our news. If you do not have anything against the comments we post on this forum, let us consider this issue settled.Best Regards,
    Alexandra Melyukhova
    PR manager
    InstaForex Company  

    Did you say the “MoneySnakeGroup”? Sounds about right.

    What I do know is that reputable companies are very careful where they advertise. No respected or respectable licensed Forex Trader will be advertising on MMG. Never have done and never will do.

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  19. Just Curious, What if U.S. clients still have funds in those offshore accounts and continue successful trading, Are those cliente able to withdraw their funds and if so, by what means?

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  20. WishfulThinking: The actions you have just described are generally known as shutting the gate after the horse is bolted.

    Changing the rules and/or ToS of a business to comply with the law, when is has not previously complied, does’t work. Andy Bowdoin of ASD already discovered this when he presented the Court with his Compliance Plan AFTER ASD had been raided by the authorities.

    Admin plug-in test.

    Patrick

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  21. In my case, I have never had any problems with my money or trades at Inovatrade. They treat me with respect and I feel really confident with them. Recently, I went to visit them at their new office in panama and everything seems to be running the way it should be. It is true that sometimes bank wires take a little bit longer than what they tell you, but this has only been the case in rare occasions, which is understandable given the bureaucracy that is present in Panamanian banking procedures. I think that if they were a scam, they wouldn’t be able to carry out bank transactions or hire people to work for them.

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