- CFTC alleges Cash FX solicited more than $950M through a purported forex trading pool.
- Participants were allegedly promised returns of up to 15% weekly from trading strategies.
- The regulator says participants lost at least $406M through the alleged scheme.
The Commodity Futures Trading Commission (CFTC) has sued Cash FX Group and four associated defendants, alleging a $950 million multilevel marketing fraud scheme tied to purported forex trading.
CFTC Alleges Cash FX Misused Investor Funds
The CFTC filed its complaint on Sept. 25 in the U.S. District Court for the Middle District of Florida. The case names Cash FX Group S.A. and CEO Huascar Jose Lopez Castillo, The Conversion Pros Inc. and CEO Ronald Pope, and Justin Halladay.
According to the complaint, the defendants solicited more than $950 million from the public for a commodity pool trading retail foreign currency contracts.
Discover more
Crypto exchange comparison
Crypto tax software
Merchant Services & Payment Systems
The CFTC alleges participants were told that professional traders, proprietary algorithms, and artificial intelligence would generate substantial trading returns. Some participants were reportedly promised returns reaching 15% weekly.
The agency further alleges that Cash FX conducted only minimal forex trading and misappropriated nearly all participant funds. New contributions were allegedly used to pay purported profits to earlier participants, while millions of dollars were paid to the defendants.
Cash FX also allegedly issued account statements showing trading gains that were not generated through actual market activity. The CFTC says participants ultimately lost at least $406 million.
Cash FX Had Faced Earlier Regulatory Warnings
The CFTC case follows regulatory warnings issued against Cash FX in several jurisdictions. The UK Financial Conduct Authority warned in December 2019 that Cash FX was unauthorized to provide or promote financial services in Britain.
Similarly, Irelands Central Bank warned in July 2021 that Cash FX was operating as an investment business without the required authorization.
Australias ASIC issued another warning in October 2021. It said Cash FX was not licensed in Australia and promoted investment plans through social media and referrals. ASIC also noted that the company accepted crypto assets as payment.
The CFTC is seeking restitution, disgorgement, civil monetary penalties, and trading and registration bans. It also wants a permanent injunction against further alleged violations of U.S. commodity laws.