The U.S. Commodity Futures Trading Commission on Tuesday hit a Bulgarian FX broker with allegations that it took funds from U.S. traders by conducting retail foreign currency trades without being registered.
The CFTC also alleged that the unregulated offshore broker, called JAFX, misrepresented its profit probability and risk of loss to customers and never disclosed that it was acting as a counterparty to FX transactions without proper registration.
The watchdog explains that from at least September 2016 till now, JAFX violated the Commodity Exchange Act and agency rules by not registering as a retail foreign exchange dealer with the commission when it solicited and accepted orders from some customers in the country.
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According to its website, JAFX has been in business since 2013, and it operates in the jurisdiction of St Vincent and the Grenadines. It claims to offer a true ECN/STP brokerage and also provides the MetaTrader 4 platform. Further, the company’s payment services are handed by JAFX EOOD, which is based out of Sofia, Bulgaria.
In 2010, the Dodd–Frank act established new rules that require retail FX brokers to register with the CFTC and also to have a $20 million adjusted net capital minimum.
The CFTC has asked the court to provide full restitution, disgorgement of ill-gotten gains and to pay the appropriate civil monetary penalties. In addition to fiscal claims, the agency seeks permanent registration and trading bans and a permanent injunction from future violations of federal commodities laws.
The CFTC further explains, “Customers are directed to open trading accounts by submitting an online account application through JAFX’s website, and JAFX encourages customers to access and trade their accounts via a mobile application, according to the Complaint. U.S. customers allegedly may open an account with JAFX for as little as $100.”