The Cyprus Securities and Exchange Commission (CySEC) announced on Tuesday that Coverdeal Holdings Ltd., which terminated services last year, is no longer a member of the Investors Compensation Fund (ICF).
The Cypriot regulator offers up to 20,000 euros protection to the deposits of all traders under any locally regulated financial services company. This ensures the safety of client deposits in case of the broker going bankrupt.
“The loss of ICF membership status does not mean loss of rights of covered clients to receive compensation in relation to investment operations carried out until the loss of membership status if the conditions for compensation are fulfilled pursuant to the Directive, nor does it obstruct the initiation of the compensation procedure for covered clients,” CySEC stated.
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An Exodus of Cypriot Brokers?
The withdrawal of the ICF membership came as the out-of-business broker, Coverdeal renounced its Cyprus Investment Fund (CIF) license last year, and the regulator withdrew it in February 2021.
Coverdeal offered investment and ancillary services and operated multiple CySEC-regulated platforms. According to the CySEC manifest, the company did not face any regulatory action but was slapped with a €250,000 penalty for compliance violations in 2018.
Coverdeal closed its business last year and urged traders to close or liquidate all open positions and withdraw funds. Furthermore, it notified the clients that it transferred funds of those who did not withdraw their balances to the investor’s compensation fund.
Lately, many brokers left CySEC, but most of them were under the regulatory radar for some kind of violations. Last month, the Cypriot watchdog removed the ICF membership of Bogofinance Capital Markets, which operated retail forex broker brand FXJet, after a similar withdrawal of the CIF license.