A solid know-your-customer (KYC) solution as part of its client onboarding process would have done the trick and save the company from a such high penalty: $374,864.
A default judgment against Laino Group Limited d/b/a PaxForex (PaxForex) of St. Vincent and the Grenadines imposed permanent trading, solicitation, and registration bans against PaxForex entering into transactions involving commodity interests.
Judge David Hittner of the U.S. District Court for the Southern District of Texas also orders the firm to pay a civil monetary penalty of $374,864.
The order stems from a CFTC complaint filed on September 24, 2020, that charged PaxForex with engaging in illegal, off-exchange transactions in Ether, Litecoin, and Bitcoin, in addition to precious metals and foreign currency, with retail customers on a leveraged, margined, or financed basis and acting as a futures commission merchant (FCM) without CFTC registration as required.
Since March 2018 that PaxForex engaged in retail commodity transactions in Ether, Litecoin, Bitcoin, gold, and silver, according to the CFTC.
The firm acted as an FCM – by soliciting or accepting orders and acting as a counterparty for these transactions – and in connection with these activities, it accepted money, securities, or property (or extended credit in lieu thereof) in the form of Bitcoin and other assets to margin trades.
PaxForex continues to operate out of its St. Vincent and the Grenadines headquarters and offers a range of leveraged products, from currencies to stocks, indices, and spot metals via a number of platforms, including MetaTrader 4.
Laino Group, the firm behind the PaxForex brand, makes clear that “the information on this website is not intended to be addressed to the public of Iraq, Syria, North Korea, u.s citizens, or any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.”
It seems, however, that the firm failed to keep United States citizens from accessing its trading services since March 2018. A solid know-your-customer (KYC) solution as part of its client onboarding process would have done the trick and save the company from a such high penalty: $374,864.