Federal Court Permanently Bans “PaxForex” From US for Offering Unregistered, Leveraged Crypto Trades

Federal Court Permanently Bans “PaxForex” From US for Offering Unregistered, Leveraged Crypto Trades

Fintech is driving innovation in financial markets across the globe. New technologies are wide-ranging in scope, from cloud computing and algorithmic trading to distributed ledgers to artificial intelligence and machine learning to network cartography, and many others.

These technologies have the potential for significant or even transformational impact on Commodity Futures Trading Commission (CFTC) regulated markets and the agency itself.

Today, the Commodity Futures Trading Commission announced that Judge David Hittner of the U.S. District Court for the Southern District of Texas entered a default judgment against Laino Group Limited d/b/a PaxForex (PaxForex) of St. Vincent and the Grenadines. The order imposes permanent trading, solicitation, and registration bans against PaxForex entering into transactions involving commodity interests and prohibits it from violating provisions of the Commodity Exchange Act (CEA), as charged. The order also requires the defendant to pay a civil monetary penalty of $374,864.

The order, entered on June 30, 2021, stems from a CFTC complaint filed on September 24, 2020, that charged PaxForex with engaging in illegal, off-exchange transactions in Ether, Litecoin and Bitcoin, in addition to precious metals and foreign currency, with retail customers on a leveraged, margined, or financed basis and acting as a futures commission merchant (FCM) without CFTC registration as required.

The order further finds that PaxForex, through its employees and agents, acted as an FCM by soliciting or accepting orders for retail commodity and foreign currency transactions and acting as a counterparty for these transactions; and in connection with these activities, it accepted money, securities, or property (or extended credit in lieu thereof) in the form of Bitcoin and other assets to margin trades or contracts that resulted or may have resulted.

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