The Commodity Futures Trading Commission has sued Cash FX Group and four associated defendants, alleging that the company collected more than $950 million through a multilevel marketing Ponzi scheme presented as a forex trading operation.
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According to the CFTC complaint, participants lost at least $406 million. The CFTC filed the case in the US District Court for the Middle District of Florida.
The defendants are Cash FX Group S.A. and its CEO, Huascar Jose Lopez Castillo; technology provider The Conversion Pros, Inc. and its CEO, Ronald Pope; and promoter Justin Halladay.
Cash FX Promised Returns of Up to 15% a Week
The regulator alleges that Cash FX solicited money from the public, including US participants, for a purported commodity pool that would trade retail foreign currency contracts.
Cash FX allegedly told participants that expert traders, proprietary algorithms and artificial intelligence would generate returns of up to 15% per week.
However, the CFTC claims that the company conducted only minimal forex trading and diverted almost all participant funds. New deposits allegedly paid fictitious profits to earlier participants.
The complaint also claims that millions of dollars were transferred to the defendants and that Cash FX issued false account statements showing returns not generated through trading. The court has not determined the allegations.
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Regulatory Warnings Began in 2019
Cash FX had attracted warnings from regulators in several countries before the CFTC filed its case. Those notices focused primarily on the company’s lack of authorisation and did not establish that it operated a Ponzi scheme.
The UK Financial Conduct Authority first warned about Cash FX in December 2019, stating that the firm was not authorised and might be providing or promoting financial services without permission.
The Central Bank of Ireland issued a similar warning in July 2021, saying that Cash FX was operating as an investment firm without the required authorisation.
Australia’s securities regulator followed with an alert in October 2021. ASIC said Cash FX was not licensed to provide financial services in Australia, recruited participants through social media and personal referrals, and promoted deposit plans supposedly linked to an expert-managed trading pool.
The CFTC is seeking restitution for participants, disgorgement of allegedly unlawful gains and civil monetary penalties. It also wants permanent trading and registration bans against the defendants, along with an injunction preventing further violations of US commodity laws.
