Daily fraud update: 7th November

CFTC puts Simple Wealth under suspicion

An American regulator has asked a court to look for more information about the actions of a firm accused of carrying out foreign exchange fraud.

The Commodity Futures Trading Commission (CFTC) wants to know more about Simple Wealth, an organisation that is accused of carrying out binary options fraud.

Around a year ago, the CFTC told a court that it was issuing a subpoena against Cody M. Wilson, who runs Simple Wealth.

However, this was not followed up on in its entirety – and this week the CFTC announced that it was filing what is known as a “Motion to Compel”.

While Wilson has submitted some documents, not all of the relevant materials have been filed.

This motion was filed at the Columbia District Court.

It is understood from press reports that part of the alleged scam was focused on social media.

A wide variety of social media pages which Wilson is accused of running (or getting associates to run) have been released.

These range from “Team Unemployable” and “Simple Wealth Academy” to “Young Millionaires” and “Onthehouse”.

The claims also suggest that Wilson and his associates told some customers that there were large profits to be made.

However, it was later alleged that many customers found it impossible to take cash out of their bank accounts.

Wilson allegedly claimed that he had been hacked.

Wilson will now have to provide all of the documents, and he will also need to present himself in person at the CFTC’s headquarters.

Crypto rules for Hong Kong revealed by regulator

A leading figure from a financial regulator in Hong Kong has used a speech to explain how the organisation intends to regulate cryptocurrency exchanges there.

Ashley Alder, who heads up the country’s Securities and Futures Commission, said that Facebook’s proposed cryptocurrency Libra had pushed the organisation into action.

As part of the changes, the regulator will now ask organisations which fall under the broad umbrella of “virtual asset trading platforms” to apply for permission to operate in accordance with the new regulatory regime.

Platforms will have to use external market surveillance tools, and they may also have to carry out more due diligence on the expertise levels of the investors to whom they offer services.

In his speech, Alder said the “more relaxed” attitude of the past may need to be altered.

“But, regardless of its future prospects, the Libra project has galvanized regulators across the world to look far harder at the opportunities and risks inherent in virtual assets”, Alder said.

“This is a significant change from the more relaxed attitude only last year. We now fully recognize that any convincing official sector response will need, for the first time ever, to coordinate properly across two important dimensions”, he added.

Hong Kong plays host to lots of cryptocurrency exchanges.

It is home to Bitfinex, an organisation which is currently facing controversy over accusations relating to its relationship with cryptocurrency Tether.

Chris Lee

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