The CFTC has sued Cash FX Group and four associated defendants, alleging the firm collected more than $950 million through a multilevel marketing Ponzi scheme presented as a forex trading operation. Participants lost at least $406 million, and regulators in the UK, Ireland and Australia had already warned about the unauthorised business years before the case was filed.
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. The CFTC filed the case in the U.S. District Court for the Middle District of Florida.
According to the complaint, participants lost at least $406 million after the company allegedly diverted their funds instead of trading them. The named 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 Cash FX solicited money from the public, including U.S. participants, for a purported commodity pool that would trade retail foreign currency contracts. The company allegedly told participants that expert traders, proprietary algorithms and artificial intelligence would generate returns of up to 15% per week.
However, the CFTC claims the company conducted only minimal forex trading and diverted almost all participant funds. New deposits allegedly paid fictitious profits to earlier participants, and the complaint says Cash FX issued false account statements showing returns that trading never generated. The court has not determined the allegations.
Regulatory warnings began in 2019
Cash FX had attracted warnings from regulators in several countries before the CFTC filed its case, though those earlier notices focused on the firm's lack of authorisation rather than establishing a Ponzi scheme. The UK Financial Conduct Authority first warned about Cash FX in December 2019, stating 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 Cash FX was operating as an investment firm without the required authorisation. Australia's securities regulator, ASIC, followed with an alert in October 2021, saying Cash FX recruited participants through social media and personal referrals while promoting deposit plans supposedly linked to an expert-managed trading pool.
Now 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 U.S. commodity laws.
Source: Finance Magnates
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