UK's FCA blacklists more crypto and forex brokers

UK’s FCA blacklists more crypto and forex brokers

Doing any kind of business over the internet has long carried with it the danger of various kinds of scams. If you money is to change hands, the pair taking it from you could very well belong to a con-artist of some kind. Recently, the regulatory body of the United Kingdom, the Financial Conduct Authority (FCA), has taken decisive action against some of these fraudsters and came out with ten new warnings against different companies. Here are the details on these firms, summed up based on the specific kind of scam they are running:

Unlicensed Forex brokers and clone firms 

If you know the first thing about Forex trading, you know how important regulation is. That is why you need to check to see if the UK forex broker you are dealing with is licensed by the local regulatory body FCA, or if it is not. If the latter is true, you are most likely dealing with an offshore broker or a scam. And such companies regularly end up on the warning list of the regulator. The past days have not been an exception – a company calling itself TradingSpace has earned itself a warning for offering its services without authorization from the FCA. Additionally, ETHProfit, another unlicensed broker, has found its way to the warning list of the FCA.

However, that is not all – sometimes these scammers get a bit more creative than claiming to operate in Britain. In these cases, they straight up take information from licensed firms to pretend to be the firm itself. What they usually take is the firm’s brand, its license number and sometimes even contact information. These so-called “clone firms” also have been noticed to rip off the websites of companies wholesale. The only way to protect yourself from them is to go to the list of regulated companies the FCA runs and check if the domain listed there corresponds to the one of the broker you are dealing with. In this latest series of warnings, one clone firm that claims to be a Forex broker has been exposed – Martyn Services Limited.

A warning on MetaQuotes – did the FCA misfire?

What’s curious about the current string of warnings is that MetaQuotes, the developer of industry-standard trading software Metatrader 4 and its successor, Metatrader 5, has earned itself a warning. We find this odd, because the company itself does not offer any kind of investment services, nor is it a brokerage. The people behind it have explicitly mentioned that on its website, via a disclaimer that it does not provide access to financial services. Their business model merely consists of selling licenses for their software to various brokerages. Therefore, the firm should fall outside of the jurisdiction of the FCA to blacklist.

It is also odd that the FCA would blacklist Misquotes after the company has become an established name on the market – it has been providing brokers and traders with the platforms we mentioned for more than a decade at this point, without any controversy.

Crypto and investment fraud

There has been a lot of ongoing interest in the crypto market from all sorts of investors, traders and so on. However, said market and the assets that are traded there are quite complex, at least for the average person. Everything seems possible to them and crypto has a bit of an image of an asset class that can simply achieve insane profits. This has led to a surge in scammers trying to defraud said clients with wild promises of incredible returns on crypto investments. The most recent company that the FCA has exposed a a scam which did exactly that is Hash Miner.

Another common scam type that often finds its way into the blacklists of the FCA is the investment scam. This is the predecessor to the crypto scam we mentioned, a company that can supposedly grant its clients obscene return rates on their investments. The regulatory body predominantly exposes these two kinds of fraud – and the current streak of warnings confirms that, with a firm called NCAP Savings added to it. The interest rates this unlicensed investment scheme offers are upwards of 6%. Yet the other investment fraud scheme exposed recently, called Lorikeet Private Technologies Limited, offers rates of upwards of 180% annually. Of course, both companies are fraudulent – you would struggle to get even the more modest amount of the two. A good rule of thumb to go by when you are trying to see if a firm is offering a realistic return rate is the proverb “If it seems too good to be true, it isn’t”. Of course, a far more reliable method of determining whether a firm is worthwhile is just checking with the register of the respective regulatory body that oversees the markets!

Fake loans and other scams 

Finally, the FCA has exposed countless firms that offer loans while being completely unlicensed. These companies are incredibly dangerous and you should never borrow money from them! What’s more, it is notable that the FCA is the regulator that exposes more of these firms than its peers – it seems they are very widespread in the UK. The latest among them has been a company called Flamingo Loans. This seemingly innocent name no doubt conceals a dangerous entity.

What’s even more concerning is a firm that goes by Lenders List in UK – another unlicensed entity that seems to be directing to the websites of more of these fraudsters. It is concerning that such a high level of organization exists among them.

The tenth and last company the FCA has added to its list of scams is a bit different – it does not claim to be an investment service, a Forex broker, and it is not even a loan shark. This entity is called FundsBack LTD – it claims to be a way you can recover your money if you have been scammed. What’s notable about it is the fact it rips off the FCA logo, pretending to be somehow connected to the regulator. If you have been victimized by a scam, you should know that these fake chargeback companies are also very common – you can stand to lose even more money if you are not careful!

John Norwood
John Norwood is best known as a technology journalist, currently at Ziddu where he focuses on tech startups, companies, and products.