Offshore crypto broker PaxForex sued by CFTC
The US authorities are continuing their war against unlicensed, offshore brokers targeting US customers. The latest salvo was made today as the U.S. Commodity Futures Trading Commission (CFTC) which regulated US derivatives markets announcing that it has filed a civil enforcement action in the U.S. District Court for the Southern District of Texas against Laino Group Limited d/b/a PaxForex, a company registered in St. Vincent and the Grenadines.
The CFTC’s complaint charges the defendant with engaging in unlawful retail commodity transactions and failing to register as a futures commission merchant (FCM).
“This action shows the CFTC’s continued commitment to ensuring that entities offering leveraged, retail transactions within our jurisdiction—including those involving digital assets—register with the CFTC,” said Division of Enforcement Director James McDonald. “We will vigorously enforce these requirements to preserve market integrity and protect customers.”
According to the complaint, from at least March 2018 to present, PaxForex offered or engaged in unlawful retail commodity transactions in ether, litecoin, bitcoin, gold, and silver. The defendant violated the CEA by failing to conduct these transactions subject to the rules of a board of trade that had been designated or registered by the CFTC as a contract market.
The complaint further alleges that PaxForex, through its employees and agents, acted as an FCM by soliciting and accepting orders for retail commodity transactions. Additionally, the defendant acted as the counterparty for these transactions and extended credit or accepted money, securities, and property in the form of bitcoin and other assets in exchange for margin trades or contracts. Despite acting as an FCM, the defendant failed to register with the CFTC as required.
In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the CEA as charged.
The CFTC strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.