During recent times, the Center for Regulation in OTC Financial Instruments and Technologies (CRFIN) – Russia’s FX self-regulatory organization, has been busy updating and enlarging its black list of fraudulent business entities luring investors in the country. The number of such companies, unfortunately, does not subside but instead rises exponentially. Less than a fortnight ago FXPresent, a suspicious online project was added to the black list. And yesterday, December 2, 2014, a similar bogus investment project joined the ranks of allegedly fraudulent companies.
CRFIN has warned that TOWER INVESTMENT FUND, an investment project running the website https://tower-invest.net/, has the characteristics of a pyramid. The service targets mainly Russian investors, promising hefty rewards for attracting new clients and lump returns on investment.
CRFIN is particularly worried of the following business specifics:
Promises of extraordinarily high and guaranteed returns: the website says fixed returns in a month could reach 7-9%.
An ambitious bonus campaign for attracting new clients: there are no limits for the reward size.
Lack of any guarantees that investors will be able to get their funds back: there is no guarantee that the money for the bonuses and other rewards for the existing clients does not come from the investments of the new clients.
There is no information about licenses.
There are signs of intent to mislead, insofar as that the project is not an actual investment fund.
The steep growth in the number of blacklisted entities reflects the uncertain legal status of the Forex industry in Russia. Earlier this week, the Bank of Russia issued a special warning against FX businesses that claim to have licenses issued by the central bank. The state banking regulator says that it cannot be responsible for the regulation of the OTC Forex segment, given that there is still no law in place.
Meanwhile, investors have to rely on warnings and recommendations of FX SROs like CRFIN in order to stay informed about fraudulent companies.
The full announcement by CRFIN on the latest addition to its black list can be found here.