The US Commodity Futures Trading Commission, or CFTC, had filed a complaint against one Laino Group Limited, which does business as PaxForex. This complaint, filed on Thursday, claims that the company was offering services without the registrations needed to do so
The Charges At Hand
The CFTC Complaint, filed at the Southern District Court of Texas, claims that PaxForex operates a trading platform and website, allowing their customers to trade in commodities. These commodities range from everything between precious metals, to forex and select cryptocurrencies.
Allegations made by the complaint is that PaxForex is illegally accepting or soliciting orders for margined, leveraged, or finance off-exchange retail precious metals, forex, and digital asset transactions from US citizens. The CFTC states that it is doing so without being registered with the CFTC, which is mandated under US law.
The Laws In Question
According to the CTFC Complaint, ever since March of 2018 to the present, PaxForex had done its business in such a manner within the US that violates the Commodity Exchange Act (“Act”), Section 4(a), 7 USC § 6(a) (2018). This stipulates that they were soliciting are accepting orders made from non-eligible contract participants, referred to as non-ECPs.
They didn’t conduct these services on, or were otherwise subject to the rules, of any exchange regulated by the Commission. This comes in regards to the sale or purchase of silver, gold, Litecoin, ETH, and Bitcoin through a margined, leveraged, or financed basis, and didn’t result in the actual delivery of the commodities to the customer.
Without registering as a futures commission merchant (FCM) with the CFTC, PaxForex had violated Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1) (2018). This is in connection with retail commodity and forex transactions, accepting securities, money or property, or otherwise extending credit, in order to guarantee, margin, or secure contracts or trades that may result from this.
As a result of the aforementioned charges, the CFTC is seeking to enjoin the unlawful practices and acts of the defendant in order to mandate compliance with the Act. Alongside this, the CFTC wants to further enjoin the defendants from engaging in any activity related to commodities.
This comes along with the typical remedial ancillary relief and civil monetary penalties that the CFTC is pushing for. This includes, but isn’t limited to, disgorgements, bans on trading and registration, rescission, restitution, as well as pre- and post-judgment interest.