Forex and CFD broker 4XP has been making the Forex headlines
for all the wrong reasons, with numerous FX news outlets covering the recent
woes of the brokerage. First off, Cyprus’s financial regulator CySEC issued a
warning to investors stating that the firm wasn’t and never had been regulated
by the body. Originally many interpreted this warning as pointing to the fact
that 4XP had been cross promoted with other regulated CySEC brokerages who were
using the same FX services firm. There has also been speculation that this
warning was released due to the regulator having received complaints about the
firm, with some forums suggesting that 4XP had not been paying out client
withdrawal requests for some time.
The situation has preceded to get worse with it being known
that the firm had cut ties with the Israeli based services firm which was
responsible for customer support, marketing and other brokerage related
services. The reason why 4XP severed its agreement with the FX services firm
which provided all of the client facing services is not known, however
customers 4XP have reported that they have been unable to get into contact with
anyone from the brokerage. Which has understandably worried customers who are
unsure whether they will be unable to get hold the cash that they had deposited
with the firm. In response to this the pseudo-regulator the FMRCC announced
that it would be revoking the licence of the firm.
Finally, 4XP sent an email to their customers stating that
they would be unable to process withdrawals and deposits due to the BVI’s
Financial Services Commission having put out a cease and desist regarding the
firm. While it was true that the countries regulator had put out a cease and
desist regarding the firms act ivies from the offshore territory of the British
Virgin Islands, this notice specifically stated that the order would not prevent
the firm from processing withdrawals. So to many this suggested that the
brokerage had concluded that it was time to shut up shop and run off with depositors
cash. This seems to have been confirmed by the fact that the brokerages website
4XP.com is down at the time of writing this article. If it is the case that the
brokerage has opted to shut up shop, it provides individuals with a good warning
to why they should never deposit with an unregulated brokerage.
It does appear that 4XP has gone belly up and the firm has
managed to disappear off with the clients assets. This isn’t the first time
that firms have collapsed and disappeared only to leave their clients high and
dry, 4XP’s sudden closure may become one of the larger straight out FX frauds
which have occurred over the last couple of years. This really highlights the
dangers of doing business with an unregulated brokerage, with proper financial
regulation providing traders with some level of protection against such happenings.
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