CFTC takes PaxForex to Court for offering FX services without registration

Laino Group Limited d/b/a PaxForex is illegally soliciting or accepting orders for leveraged retail off-exchange forex, precious metals, and digital asset transactions from US customers without being registered with the CFTC.

The United States Commodity Futures Trading Commission (CFTC) on Thursday filed a complaint against Laino Group Limited d/b/a PaxForex alleging that the company is offering services without having the necessary registration.

According to the CFTC Complaint, submitted to the Texas Southern District Court, PaxForex operates a website and trading platform, www.paxforex.com, which allows customers to trade commodities ranging from foreign currencies and precious metals to certain digital assets including ether, litecoin, and bitcoin. The complaint alleges that PaxForex is illegally soliciting or accepting orders for leveraged, margined or financed retail off-exchange foreign currency, precious metals, and digital asset transactions from U.S. customers without being registered with the CFTC, as required.

The CFTC Complaint alleges that, from at least March 2018 through the present, PaxForex has conducted a business in the United States in a manner that violates Section 4(a) of the Commodity Exchange Act (“Act”), 7 U.S.C. § 6(a) (2018): by soliciting or accepting orders from non-eligible contract participants (“non-ECPs”), not conducted on or subject to the rules of any Commission-regulated exchange, for the purchase or sale of gold, silver, ether, litecoin, and bitcoin on a leveraged, margined or financed basis that does not result in actual delivery of the commodities to the customer.

Further, without registering with the Commission as a futures commission merchant (FCM), PaxForex, in or in connection with forex and retail commodity transactions, accepts money, securities, or property (or extends credit in lieu thereof) in the form of bitcoin or other assets, to margin, guarantee, or secure trades or contracts that result or may result therefrom, in violation of Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1) (2018).

The CFTC seeks to enjoin the defendant’s unlawful acts and practices, to compel compliance with the Act, and to further enjoin the defendant from engaging in any commodity-related activity. In addition, the Commission seeks civil monetary penalties and remedial ancillary relief, including but not limited to, trading and registration bans, disgorgement, restitution, rescission, pre-judgment and post-judgment interest.