Foreign Currency (Forex) Fraud | CFTC (2024)

The forex market is volatile and carries substantial risks. It is not the place to put any money that you cannot afford to lose, such as retirement funds, as you can lose most or all it very quickly. The CFTC has witnessed a sharp rise in forex trading scams in recent years and wants to advise you on how to identify potential fraud.

Signs of a Possible Fraudulent Sales Pitch

  • Lead you to believe you can profit from current news already known to the public.
  • Made through word of mouth referrals or emails from friends and relatives, members of community organizations, churches, or social groups.
  • Contacts you asking for personal information such as your name, phone number, and email and home addresses.
  • Promising that with forex there is no “down-turning market”.

Possible Persuasion Tactics You May Experience

  • Dangling the prospect of wealth and enticing you with something you want, but can't have.
    "This Euro/dollar deal is guaranteed to rise double what your current investments are doing."
  • Trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience.
    "Believe me, as a 10-year senior vice president at this firm, I would never sell something that doesn't produce."
  • Leading you to believe that other savvy people have already invested.
    "This is how Bob down the street from you got his start. I know it's a lot of money, but I'm in—and so is half our club. It's worth every dime."
  • Offering to do a small favor for you in return for a big favor.
    "I'll give you a break on my normal forex commission if you buy now—half off."
  • Creating a false sense of urgency by claiming limited supply.
    "There are only two units left and the Asian market is about to open, so I'd sign up today.”

Watch for These Red Flags to Help Identify Foreign Currency Trading Scams

  • Promises that with forex, there is no “bear” market
  • Firms that claim you can or should trade in the interbank market
  • Requests to send or transfer cash quickly via the Internet, by mail, or otherwise
  • Difficulty getting background information about the person and/or company

Before Participating in Forex Trading, Ask, Ask, and Ask Some More!!

  • Contact the CFTC to check the company’s registration status, business background, and disciplinary history
  • Ask about the details of the forex trading market and your obligations if you participate
  • Ask about the firm and the individual’s performance record on behalf of other clients
  • Ask anyone not willing to comply why they are being hesitant to do so
  • Ask for all information in writing. Do not rely on oral promises or statements
  • Check all information you receive to ensure that the company is and does what it says it does
  • Ask for a written risk disclosure statement
  • Ask for the advice of an independent and licensed financial advisor or consultant whom you trust

Questions to Ask any Financial Professional

  • How are you qualified to provide me this service?
  • How does this product meet my financial needs?
  • How are you paid for your service?

If You Decide to Participate In Forex Trading

  • Do not deposit more funds than you can afford to lose.
  • Do not mortgage your home or cash in your savings.
  • Margin trading can make you responsible for losses that greatly exceed the dollar amount you deposited. Do not trade forex if you cannot withstand the additional loss.

If you have questions, are aware of suspicious activities, or believe you have been defrauded, please contact the CFTC quickly. Call the CFTC at 866.366.2382 or file a tip or complaint.

Foreign Currency (Forex) Fraud | CFTC (2024)

FAQs

Foreign Currency (Forex) Fraud | CFTC? ›

If you have questions, are aware of suspicious activities, or believe you have been defrauded, please contact the CFTC

CFTC
Commodity Futures Trading Commission. CFTC: The Federal regulatory agency established by the Commodity Futures Trading Act of 1974 to administer the Commodity Exchange Act.
https://www.cftc.gov › AdvisoriesAndArticles › CFTCGlossary
quickly. Call the CFTC at 866.366. 2382 or file a tip or complaint.

What is the biggest forex scandal? ›

The forex scandal (also known as the forex probe) is a 2013 financial scandal that involves the revelation, and subsequent investigation, that banks colluded for at least a decade to manipulate exchange rates on the forex market for their own financial gain.

How do I get my money back from forex? ›

Here is the step-by-step guide for withdrawing money from your forex account:
  1. Step 1: Log into Your Trading Account. ...
  2. Step 2: Locate the Withdrawal Section. ...
  3. Step 3: Verify Your Identity. ...
  4. Step 4: Choose Your Withdrawal Method. ...
  5. Step 5: Review and Confirm the Withdrawal Request. ...
  6. Step 6: Monitor the Withdrawal Process.
Dec 15, 2023

How do I complain about forex fraud? ›

Here's how to file a complaint against an online forex trading company:
  • Gather Evidence: Collect documents like trade confirmations, account statements, emails, and any communication with the company that supports your complaint.
  • Try to Resolve with the Broker: Most forex brokers have a complaint process.
Mar 15, 2024

Is forex trading money laundering? ›

There are some well-known indicators that are potential signs of money laundering. In forex trading, the principles are the same. For example, structured transactions involving multiple transfers across different countries or payments made to high-risk jurisdictions are also red flags linked to illicit activities.

Why 90% of forex traders fail? ›

Lack of Risk Management

This can include setting stop-loss orders to limit losses, diversifying your positions to spread risk, and avoiding risky trades beyond your position sizing limits. Unfortunately, many traders fail to implement a solid risk management plan and take on more risk than they can handle.

Who manipulates the forex market? ›

Market makers are large institutions distributing liquidity through bid-ask offerings in the forex market. Market makers can manipulate the market through front-running, stop-loss hunting and spreads.

How do I get money back from my Forex funds? ›

Have you been a victim of Forex Fraud? Chargeback Procedure - when can it be requested and how does it work?
  1. The purchase or payment must have been made using the credit/debit card.
  2. Once you have contacted the bank you can ask to open a case for chargeback so that the bank can investigate the nature of the transactions.

Can you recover money lost in Forex? ›

If you are unable to withdraw, you should start working with authorities, your bank, and possible even the broker's bank as soon as possible. You can even try to charge back the deposit amount through your bank if you topped up your trading account with a credit card.

Why I quit trading Forex? ›

Having the wrong expectations and starting forex trading for the wrong reasons will lead any trader to quit. But trading is not like a hobby and takes patience, love, passion, and dedication. Again, lacking the perseverance and passion for the game will also lead many traders to quit.

How to spot a forex scammer? ›

Unrealistic Promises: Forex scammers often make unrealistic promises of high returns or guaranteed profits. Remember, trading in the forex market involves risks, and no legitimate broker can guarantee profits. Poor Customer Reviews: Research and read customer reviews about the broker or investment company.

Is forex a pyramid scheme? ›

If you're asking yourself “Is forex a pyramid scheme?”, the answer is no. But pyramid schemes and other scams are well known in the forex trading universe, similarly to the stock market and real estate and just about any other legitimate type of investment.

How do I report trading fraud? ›

To sum it up

Everyone who is a participant of the securities market in India carries the responsibility of reporting any practices that violate the trading standards prevailing therein. You can do so by filing an online complaint with the Securities and Exchange Board of India.

What is the red flag in forex trading? ›

In summary, the lack of regulation or licensing should serve as a red flag for potential forex trading scams. Investors should exercise caution when dealing with unregulated brokers and prioritize the safety of their funds by choosing reputable brokers that adhere to regulatory standards.

What is smurfing? ›

Smurfing involves splitting large sums of money into smaller, more easily concealable amounts of illegally obtained funds to avoid detection by authorities, while structuring involves deliberately depositing cash in smaller amounts to avoid reporting requirements.

Is forex trading a form of gambling? ›

Forex trading is the ultimate form of gambling. We get to review past price action before putting on a trade. Can you imagine getting to see the dealer's hand before making a decision at the casino? That's exactly what we can do in Forex.

What is the biggest risk in forex trading? ›

Transaction Risk

This is one of the main risk factors in forex trading and is contingent on exchange rate changes. Since forex trading is active round the clock, exchange rates are subject to change before a trade settles.

What is the biggest forex trade ever recorded? ›

Probably the greatest single trade in history occurred in the early 1990s when George Soros shorted the British Pound, making over $1 billion on the trade. Most of the greatest trades in history are highly leveraged, currency exploitation trades.

Did anyone get rich with forex? ›

One of the most famous examples of a forex trader who has gotten rich is George Soros. In 1992, he famously made a short position on the pound sterling, which earned him over $1 billion. Another example is Michael Marcus, also known as the Wizard of Odd.

Are there any billionaire forex traders? ›

George Soros, often referred to as the «Man Who Broke the Bank of England», is an iconic figure in the world of forex trading. His net worth, estimated at around $8 billion, reflects not only his financial success but also his enduring influence on global markets.

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