The United States Commodity Futures Trading Commission (CFTC) continues with its actions against unregistered Forex brokers targeting US clients. Less than a month after the CFTC secured a default order against Tallinex, the US regulator has launched a civil action against another offshore entity that allegedly operates as an unregistered foreign exchange dealer targeting US customers.
According to the documents filed with the Utah District Court, the CFTC accuses JAFX Ltd, also known as JAFX EOOD, an offshore company claiming to operate from St Vincent and the Grenadines and Bulgaria, of violating the Commodity Exchange Act and Commission Regulations.
The CFTC Complaint against the broker says that, beginning in at least September 2016 and continuing to the present, JAFX has offered retail Forex services to customers in the United States. The entity has never been registered as a retail foreign exchange dealer (RFED) or in any other capacity with the CFTC.
While the website of the broker contains language noting that the solicitations are not directed at US customers, there is nothing in the online account application stating JAFX does not accept US clients nor are US customers prevented from opening accounts. The application process involves a drop-down menu of countries from which JAFX accepts customers and the first name in the list is the United States. In fact, US customers may open an account with JAFX with as little as $100.
That JAFX actively seeks US customers is demonstrated by other aspects of its website which provides a “US toll free number”, and the fact that, according to the CFTC, the company has accepted thousands of applications from US customers.
JAFX appears to acknowledge its unlawful conduct by stating:
“JAFX is currently not regulated. Regulation takes a very long time to set up and we are in the process of applying for regulation.”
The CFTC notes it has not received any application from JAFX.
The US regulator alleges that JAFX operates as an unregistered foreign exchange dealer and has failed to provide a disclosure statement. Accordingly, the CFTC is seeking an order of permanent injunction against JAFX, as well as restitution and civil monetary penalties whose size has yet to be determined.
The case is captioned Commodity Futures Trading Commission v. JAFX (2:18-cv-00598).
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