On 3 September 2024, the Commodity Futures Trading Commission (CFTC) took significant enforcement actions against four online trading platforms, including cryptoiminerstrade.com, FalconForexBot, and Expert Stocks Zone, and swiftminingexpert.com for operating as unregistered futures commission merchants (FCMs) and misleading the public regarding their regulatory status. These platforms were found to be conducting illegal activities by soliciting and accepting customer orders for binary options and other commodities-based financial transactions, including those linked to cryptocurrencies like Bitcoin, without the required registration. The platforms also falsely claimed to be regulated by the CFTC, leading investors to believe that their transactions were safeguarded by U.S. financial laws, which was not the case.
The complaint against cryptoiminerstrade.com alleges that the platform presented itself as a major player in the binary options and cryptocurrency trading sector, offering financial services based on the value of foreign currencies and commodities, including Bitcoin. The platform claimed to be regulated by the US CFTC, stating that it provided a safe and secure environment for investors. US CFTC’s investigation revealed that cryptoiminerstrade.com had never been registered with the Commission in any capacity. Despite this, the company solicited customer funds, accepted orders for binary options, and executed trades without adhering to the strict registration and regulatory requirements mandated by the United States Commodity Exchange Act (CEA). The CFTC’s complaint charged cryptoiminerstrade.com with violating Section 4d(a)(1) of the CEA, which requires FCMs to be registered with the CFTC if they are accepting and handling customer orders tied to swaps, commodities, or futures. The platform’s false claims about its regulatory oversight misled a large number of investors, exposing them to significant financial risk.
In the complaint, US CFTC also charged FalconForexBot with allegedly operating as an unregistered FCM. This platform allegedly engaged in offering binary options and other commodities-based trading services, including forex and cryptocurrency transactions, without being registered with the CFTC. FalconForexBot falsely claimed to be a regulated entity, leading customers to believe that their trades were being conducted under U.S. regulatory protections. The US CFTC’s investigation found that the company was not registered and that its operations were in violation of U.S. financial laws. The platform accepted customer funds, executed binary options transactions, and made false claims about the security of these transactions, all of which constituted serious breaches of the US CEA.
In the complaint, Expert Stocks Zone was allegedly found to be in violation of U.S. financial laws by operating as an unregistered FCM. The CFTC’s complaint detailed how the platform solicited and accepted customer orders for binary options and forex trading without the required registration. Expert Stocks Zone advertised itself as a legitimate and regulated platform, claiming that it was a leader in the U.S. financial market. The company also made broad claims about the safety and security of its financial transactions, asserting that all customer funds were protected. However, the CFTC’s investigation revealed that Expert Stocks Zone was not registered with the Commission and that its claims of regulatory oversight were false. The company’s failure to register as an FCM, combined with its misleading marketing practices, were in violations of the United States’ Commodity Exchange Act.
US CFTC also filed complaint against swiftminingexpert.com for operating as an unregistered futures commission merchant and making false claims about its regulatory status. The CFTC alleges that the company violated Section 4d(a)(1) of the Commodity Exchange Act by illegally soliciting and accepting customer funds for transactions tied to binary options and cryptocurrencies without proper registration. Swiftminingexpert.com falsely claimed to be regulated by the CFTC, misleading investors into believing that their transactions were conducted under the protection of U.S. regulatory oversight. The CFTC is seeking a cease-and-desist order to halt swiftminingexpert.com’s operations and prevent further violations of the CEA, reinforcing the Commission’s commitment to maintaining the integrity of U.S. financial markets and protecting investors from fraudulent practices.
The companies involved used their allegedly unregistered platforms to solicit funds from customers, execute binary options trades, and accept orders for commodities-based financial transactions without the necessary legal safeguards in place. The alleged false claims of regulatory oversight gave investors a false sense of security, leading many to believe that they were engaging with legitimate, compliant financial entities when, in fact, they were not.
The investigation into cryptoiminerstrade.com, FalconForexBot, and Expert Stocks Zone was conducted by the CFTC’s Division of Enforcement, which uncovered the extent of the companies’ violations of the Commodity Exchange Act.
In a dissenting statement on 24 September 2024, Commissioner Summer K. Mersinger raised concerns over the Commodity Futures Trading Commission’s (CFTC) approach in the “Unregistered Entity Sweep” actions against cryptoiminerstrade.com, Expert Stocks Zone, FalconForexBot, and swiftminingexpert.com. The Commissioner dissented from the use of administrative proceedings to charge these entities as unregistered futures commission merchants (FCMs). Mersinger argued that there was insufficient evidence presented to demonstrate that the companies accepted customer funds to margin, guarantee, or secure trades—critical components of an FCM’s role. Her dissent was grounded in the need for greater scrutiny, especially in light of the U.S. Supreme Court decision in SEC v. Jarkesy, which establishes the standard for using administrative enforcement actions. While she supported the need to prevent companies from falsely claiming CFTC registration, Mersinger could not endorse the FCM charges without stronger evidence and urged for more thorough analysis before proceeding with such cases.
(Source: https://www.cftc.gov/PressRoom/PressReleases/8976-24)
