The United States Commodity Futures Trading Commission (CFTC) is pushing for a fine of $374,864 for unregistered FX firm PaxForex. This becomes clear from the latest filings with the Texas Southern District Court.
PaxForex, a brand of Laino Group, operates a website and trading platform, which allows customers to trade FX, precious metals and certain digital assets including ether, litecoin, and bitcoin. The CFTC alleges that the problem with PaxForex’s business is that it is illegally soliciting or accepting orders for leveraged, margined or financed retail off-exchange Forex, precious metals, and digital asset transactions from U.S. customers without being registered with the CFTC.
According to the CFTC’s Complaint, from at least March 2018 through the present, PaxForex, through the actions of its officers, employees, and/or agents, has conducted a business in the United States in a manner that violates Section 4(a) of the Commodity Exchange Act, 7 U.S.C. § 6(a) (2018).
Further, without registering with the CFTC as a futures commission merchant (FCM), PaxForex, in or in connection with Forex and retail commodity transactions, accepts money, securities, or property (or extends credit in lieu thereof) in the form of bitcoin or other assets, to margin, guarantee, or secure trades or contracts that result or may result therefrom, in violation of Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1) (2018).
The CFTC has brought an action to enjoin PaxForex’s unlawful acts and practices, to compel compliance with the Act, and to further enjoin the firm from engaging in any commodity-related activity.
Now, the regulator has specified the sanctions it seeks regarding the defendant. According to a proposed default judgment, seen by FX News Group, the CFTC requests that the Court order a permanent injunction prohibiting the defendant from:
further violating the Act;
trading on or subject to the rules of any registered entity;
entering into transactions involving commodity interests or having such interests traded on its behalf;
controlling or directing the trading in any account involving commodity interests for another person;
soliciting, receiving or accepting funds from any person for the purpose of purchasing or selling commodity interest;
applying for registration or claiming exemption from registration with the CFTC or engaging in any activity requiring registration or exemption; and
acting as a principal or agent of any person registered, or required to be registered.
The CFTC requests that the Court impose a CMP of $374,864, representing the maximum amount for each violation for PaxForex’s two violations: (i) offering or accepting orders from U.S. retail customers in leveraged, margined or financed commodities (precious metals and digital assets) transactions in violation of 7 U.S.C. § 6(a); and (ii) acting as an FCM without being registered with the CFTC in violation of 7 U.S.C. § 6d(a)(1).