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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) has taken a case over a $1.5 million Forex fraud to court.
Today, the US regulator announced that it had filed an enforcement action in the U.S. District Court for the Eastern District of New York against Safety Capital Management and GNS Capital, Inc., both doing business as FOREXNPOWER, as well as John Won, a controlling person of GNS, and Sungmi Kang, a controlling person of both Safety and GNS.
The defendants are charged on several counts, including fraudulent solicitation of more than $1.5 million from customers in an off-exchange Forex scheme. In addition, the defendants are accused of misappropriation of over $622,000 of customer funds. Tae Hung Kang (also known as Kevin Kang), an officer and agent of Safety and GNS, is charged with fraudulent solicitation of customers.
Under the CFTC complaint, from at least October 2010 through December 2013, Safety and GNS fraudulently solicited over $1.5 million from more than 90 retail customers to participate in a forex commodity pool and/or to open forex trading accounts managed by Safety or GNS.
The CFTC alleges that Safety and GNS made false representations, stating that
FOREXNPOWER had a “secret trading method” that guaranteed customers would obtain a “monthly profit rate of 10%,”
investors “will not lose their money at all, not even $1;”
customers would make $100,000 with only a $500 investment.
Tae Hung Kang promised that the profits did not involve any risk of loss. But the reality was that the forex pool participants and retail forex customer accounts managed by the companies had never earned such profits and had in fact lost money.
Other charges include commingling commodity pool funds with non-pool property, failing to operate a commodity pool as a separate entity, receiving pool participants’ funds in Safety or GNS’s name rather than in the name of the commodity pool, and failing to register Safety and GNS with the CFTC as Commodity Pool Operators (CPOs) and Commodity Trading Advisors (CTAs), as required.
The CFTC will seek restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the federal commodities laws.
To view the CFTC’s announcement about the FOREXNPOWER investigation, click here.