Regulatory Loopholes and Lapses Used to Scam You

Updated: Jul 3

Pig butchering scammers can get so elaborate they really take advantage of regulatory and compliance blind spots to appear legitimate and deceive victims.



NFA Exempt Commodity Pool Trader Status

All derivatives businesses in the US are required by CFTC regulations to register with the National Futures Association (NFA). Basically, an NFA registration is required to be a derivatives broker in the US. However, the NFA also issues exemptions and even provides an NFA number for it. So, scam brokers file for exemptions, then plaster that NFA number on their fraudulent website.
























The relationship scammer or the fake customer service can then even encourage victims to look them up on the NFA website and search their number! And it will be there! This makes it as if the scam broker is really registered with and supervised by the NFA. This is extremely confusing and makes it hard to distinguish a scam broker from a real broker.


UPDATE: NFA seems to have put warnings now if an entity is NOT a member despite having an NFA ID (for exemptions)



Misleading FINTRAC registration

In Canada, scam companies use FINTRAC registrations to appear legitimate. However, FINTRAC is Canada’s anti-money laundering agency that regulates money transmitters like Western Union, and has zero oversight on investments. Most people do not know this until it’s too late.


At least, could there be more due diligence needed before putting a company registration details on a government website?

What gets lost is that somewhere in the FINTRAC website is an obtuse warning that: "Registration with FINTRAC does not indicate that FINTRAC endorses or licenses the business. It indicates only that the business has satisfied the legal requirements to register."


JYJ Trader is a scam company that GASO knows many pig butchering scam victims of.



Registration with State Attorney General Offices

Scam companies register hundreds of shell companies in the US via a basic state business license, to show victims that they are a real, registered business in the US, or for opening bank accounts for laundering money. Couldn't there be more due diligence by state Attorney General offices make registrants, especially investment companies or money transmitters, to show proof of registration with the NFA and/or some type of security check with the CFTC (Commodities Futures Trading Commission)?



Financial software used for trading is NOT regulated

MetaQuotes, developer of the MetaTrader software scammers often lead victims into using, allows anyone with a basic MetaTrader license for their software to also use the Virtual Dealer plug-in. Virtual Dealer plug-In is a 3rd party software that allows manipulation of trading charts, signals, account balances, etc., including delaying real market signals by up to an hour. MetaQuotes knows this but does nothing to stop it. Hence anyone can get a basic MetaTrader license to steal from US citizens. See more info here: MetaTrader has Forex and Crypto Fraud.


MetaTrader 5, also on Apple Store


Can’t MetaQuotes be required to obtain registration or approval from the NFA or CFTC prior to allowing any broker from any country let Americans trade on MetaTrader? For example, a broker must show a client contract to US citizens, get the NFA or CFTC to authorize each contract and only then can someone sign up to use MT to trade with that broker. We reckon at this point that losses through fraud on MetaTrader 4 or 5 should be at least half a billion dollars, if not over. This including non-crypto pig butchering scams. Can MetaQuotes be held accountable?



Banks for Money Mules

Pig butchering scammers have gone as far as to set up US bank accounts for victims to wire money to, supposedly to deposit money and/or buy cryptos directly from them. This was always provided as an alternative option by scam investment websites, especially before 2022. So they have registered shell companies in the US, or recruit Chinese international students in college, to open bank accounts in Bank of America, Chase and especially East West bank, which had hundreds of such accounts by several such mules.


For bank business accounts claiming to be for trading houses, is there no due diligence by the banks to check with the NFA or CFTC? Why are college students in the US on student visas allowed to open so many bank accounts? How can the banks not see a pattern of 18 to 22 year old kids setting up an account that had millions of dollars flowing through it and then closed a few months later? Either the bank employees are stupid or turn a blind eye on what is going on.



Cryptocurrency help globalized scamming.

Finally, since cryptocurrency lives in a mostly unregulated virtual space, scammers can withdraw literally millions of dollars, scot-free, from banks almost anywhere in the world, like Thailand or Cambodia, when converting their stolen cryptos into fiat on unregulated exchanges, like Huobi.



Contributed by The_Punisher from Forex Peace Army

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