Sources with knowledge of the matter have confirmed to Finance Magnates that Ukrainian police has raided the offices of several brokers that are operating there. The news comes amid an increasingly stringent crackdown on the industry in recent quarters.
While no arrests have been made, local law enforcement authorities have allegedly confiscated some documents from the offices of the firms they visited. The move coincides with Ukraine continuing to seek close relations with the EU.
Outsourcing Call Centres
In recent years, Ukraine has become something of a haven for call centers of unregulated brokers. The country’s proximity to the EU and the vast talent pool of relatively cheap labor has attracted numerous companies that have been involved in the aggressive sale of binary options and forex trading products.
After EU authorities have started their actions against call centers in countries such as Romania, brokers that are mainly providing their services in an unregulated fashion moved away into countries such as Bosnia and Herzegovina, Macedonia, Serbia, and Montenegro.
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The likelihood that pressure from EU authorities forced action on the part of local law enforcement is material, especially in light of recent announcements from Google and Mastercard.
The latest trends in this part of the industry have been to operate crypto brokers who are charging overnight annual interest rates of over 200% to their clients and hence resulting in big losses for clients who buy and hold cryptocurrencies with them.
Aside from the hot sales call centers in Ukraine, some locally-based schemes have raised suspicion about the industry on the part of local law enforcement. Typically running as pyramid schemes, several Ukrainian fraudsters have managed to attract retail investor capital.
Forex Trend also known as Concorde FX, has been operating until 2015 when New Zealand authorities exposed it. Ukraine was also home to another big case that stirred controversy across the industry. Clients of pyramid scheme MMCIS, have never been able to recover their deposits with the company and Russian TV alleged that the company was linked to Ukrainian politicians.