The Cypriot regulator has warned against entering into transactions today, particularly involving CFDs, cryptocurrency and forex-trading, via online trading platforms operated by unlicensed providers.
The Cyprus Securities and Exchange Commission said before that some of these illegal brokers were just spinoffs of previously shuttered companies while others misleadingly claim affiliation with other brokers that are already regulated in Cyprus and hold its CIF License. The watchdog has blacklisted the following domains:
One of the blacklisted brokers, fxpb.us, has suspended its trading services for 8 working days, according to a statement published on its website. The incident may suggest an exit scam is currently underway following several warnings from different regulators.
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There is plenty of speculation on forex forums that they headed for the exits carrying clients’ money, but nothing concrete about what has happened to FXPB. However, the company’s offering carries all the hallmarks of fraud as FXPB presents itself as an ECN Forex broker, authorised by a mix of authorities in Europe, including the UK FCA and CySEC. There was no need to validate the regulatory claims as while EU regulators impose a leverage cap of 1:30, FXPB allows traders to juice up their bets with up to 300 times.
Another broker in the list, PrimaryFxMarkets, operates FX trading and asset management business offering a variety of accounts with assured returns. It also claims to be properly regulated by CySEC, which the Cypriot watchdog has just denied.
Cysec stresses that these firms are not licensed to operate a brokerage business in Cyprus, nor are they affiliated with a regulated entity. Additionally, it warns that if consumers lost their money on platforms that are not licensed, they are not protected under the Investor Compensation Fund (ICF). This serves to protect the claims of covered clients and provide them with compensation, in case a member was unable to meet its financial obligations.
While many providers claim to be Cyprus-based, CySEC said, previously it believed such companies were based overseas and providing false addresses, adding that it would look into taking further action if companies were actually based within the country. It further explains that it is sometimes hard to find the names of the platforms’ operators on their websites, and that the addresses given as the company headquarters are often offshore letterbox addresses.