Cyprus’ forex industry has been rattled by €15 mln trading fraud, forcing two Limassol-based firms out of business, while more than 2,000 people employed have lost their jobs in recent weeks.
Industry sources said recent revelations implicate at least two Limassol based companies, with close to 2,500 employees left without a job.
The island’s forex sector has been spotlighted after the companies were linked to a multi-million forex trading scam from Ukraine to South Africa.
According to sources, the ring’s Cyprus connections allegedly defrauded €15 mln from dozens of foreign citizens, mostly US residents.
An Israeli connected to a Cyprus-based forex firm was arrested earlier this month on the demand of the United States Federal Bureau of Investigation (FBI).
It follows the arrests of 26 Israelis on suspicion of running a massive forex and crypto trading scam in a joint operation conducted by Israel police.
The arrest of the Cyprus-based Israeli was confirmed to the Financial Mirror by local police.
It is believed the arrest is connected to 26 made by the US and Israeli authorities.
In a joint operation, the FBI and the Israel police raided a Tel Aviv-based company and arrested 26 Israelis for suspected involvement in running organised financial fraud.
According to international media, Cyprus police collaborated with Europol and other local authorities in Bulgaria, Germany, the Netherlands and Ukraine to bust a binary options fraud ring.
Sources close to regulatory authorities confirmed to the Financial Mirror that at least two firms were being looked into for connections to the ring.
In October, the Cyprus Securities and Exchange Commission (CySEC) announced that it had suspended the Cyprus Investment Firm (CIF) license of Limassol-based Maxiflex Ltd and Maxigrid Ltd.
According to the decision, directives were issued for suspicion of alleged violations of the ‘Investment Services and Activities and Regulated Markets Law,’ which could constitute a threat to the market’s integrity.
Specifically, CySEC said the companies appear to conduct business and/or be engaged in conducting business and/or facilitating business not stated in its authorisation.
Maxiflex and Maxigrid are not allowed to provide and carry out investment services or activities, enter into any business transaction with any person and accept any new client.
Moreover, the firms cannot advertise themselves as a ‘provider of investment services’.
Maxigrid traded in the EU and the UK under EuropeFX, while Maxiflex was trading under AGM Markets.
Both EuropeFX and AGM Markets were the source of countless complaints and reports of misconduct over the past two years.
EuropeFX and AGM Markets have been banned by the Financial Conduct Authority (FCA) from doing business in the UK.
High value
According to Europol and Eurojust, an Operational Task Force led to eight house searches, 17 individuals questioned and one “high-value” arrest in Cyprus.
The operation included the seizure of electronic equipment, bank accounts, phones and data backups.
Law enforcement unveiled on its inquiries that the criminal network ran the binary options fraud between May 2019 and September 2021, encouraging German investors to make transactions worth at least €15 mln.
The fraudsters attracted victims via social media, and 250 domain names were created for the purpose.
Authorities said the network was operating from a company in Ukraine that ran a call centre in Sofia, Bulgaria.
“To undertake the scam, the call centre employees had scripts containing predefined conversations and key messaging to convince clients to release more funds.
“However, a subsequent investigation suggests that most of the employees were not aware that the company they were working for was involved in a fraud scheme.
“Initial profits shown in the user interface encouraged the clients to invest large sums of money.
“However, clients did not receive payment of their winnings or credit balance once they requested it,” Europol said.
