Release Number 8256-20
CFTC Charges Foreign Trading Platform with Offering Illegal Leveraged Transactions in Ether, Litecoin, and Bitcoin
September 28, 2020
Washington, D.C. – The Commodity Futures Trading Commission today 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.
The CFTC thanks the U.S. Attorney’s Office for the Southern District of Texas and the Federal Bureau of Investigation for their assistance in this matter.
Devon Malinowski and Salma Mackfrom the CFTC’s Office of Data and Technology also provided assistance in this matter.
The Division of Enforcement staff members responsible for this case are Harry E. Wedewer, Christopher Giglio, Candice Aloisi, Lenel Hickson, and Manal Sultan.