Daily fraud update: 17th April

Chris Lee
CFTC emblem outside of the office building

CFTC acts in alleged forex fraud case

A leading US regulator has announced that it has filed a complaint in a Florida court over accusations that a man scammed traders out of a seven-figure sum of forex.

The Commodity Futures Trading Commission (CFTC) said that it had charged both a person named Alan Friedland and his two firms – Fintech Investment Group, Inc. and Compcoin LLC – in connection with the allegations.

The CFTC claims that Friedland was responsible for scamming traders out of a figure higher than $1.6m.

Friedland allegedly did this via an off-exchange forex scheme based around leverage, the CFTC said in a statement.

The CFTC alleged that Friedland had told the traders that if they purchased a “digital asset” then they would be able to access the foreign exchange algorithm used by the firm.

Friedland also allegedly told traders that ART, which was the name given to the firm’s algorithm, was almost ready to use.

However, it allegedly transpired that this was not true, and that Friedland had failed to secure the appropriate permissions.

The CFTC published a statement which went into more detail about Friedland’s alleged crimes – including information about alluring potential profits.

“According to the complaint, starting in at least 2016 and proceeding through 2018, Friedland and his companies fraudulently solicited customers and prospective customers to purchase a digital asset known as Compcoin”, the statement read.

“The defendants falsely promised, among other things, that Compcoin would allow customers to gain access to Fintech’s proprietary forex trading algorithm known as ART, and falsely advertised that ART would deliver high rates of return”, it added.

According to the CFTC’s Director of Enforcement, James McDonald, the Commission would continue to protect “market participants from fraudulent schemes”.

“The CFTC remains committed to protecting market participants from fraudulent schemes, including novel forms of fraud like the one alleged here, where defendants allegedly solicited customers to purchase a digital asset in order to gain access to Fintech’s purported forex trading algorithm”, he was quoted as saying.

In a further development, it has been revealed that the National Futures Association – which is a trade body operating in this field – summarily suspended Friedland’s membership.

It also filed with the CFTC a “member responsibility action” against Friedland’s firm Fintech.

“The action summarily suspended Fintech and Friedland from NFA membership and prohibits them from soliciting and accepting any customer funds related to forex trading, among other things”, the CFTC said.

“The CFTC thanks the NFA and the Financial Markets Authority of New Zealand for their assistance in this matter”, it added.

The CFTC concluded by advising traders to always check to see whether or not the institutions they plan to trade with are licensed.

“If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC”, it said.

Chris Lee

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