CFTC secures default win in case against FX broker PaxForex
The United States Commodity Futures Trading Commission (CFTC) has secured a relatively quick win in its case against unregistered FX broker PaxForex. Less than a year after the CFTC brought its action against PaxForex, a brand of Laino Group, the regulator has managed to obtain a default judgment against the firm.
On June 30, 2021, Judge David Hittner of the Texas Southern District Court, signed the default judgment proposed by the CFTC. According to the document, seen by FX News Group, the defendant is prohibited 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 Court also orders PaxForex to pay a civil monetary penalty 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).
Let’s recall that PaxForex, a brand of Laino Group, operates a website and trading platform, which allows customers to trade FX, precious metals and certain digital assets. 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.
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 case is now closed.