The EuroFX is a company who appears to have scammed close to 4,000 people around the world offering fat returns. Being registered in the UK, the company targeted foreign investors, this way avoiding the jurisdiction of the British regulatory authorities. Why did the West ignore British EuroFX Ponzi scheme?
15 August, AtoZForex – London registration address surely helped to attract Chinese investors to EuroFX. However, the venture was not regulated by any authority of the United Kingdom. In fact, the business represents a scam which grew and flourished in the gap between the national regulatory systems.
EuroFX: ignored British Ponzi schemes?
Chinese investors first heard about EuroFX in summer of 2012. David Byrne, 52-year old British businessman had introduced himself to potential customers as the new London head of a Forex trading platform whose website marketed very high returns. The operation EuroFX has promised large profits on foreign exchange. For an investment of $10,000, you could expect a return of 6% a month. For $100,000, 12%. Later, another EuroFX product offered up to 16% to anyone who would invest 250,000. Advertising brochures stated that the company has 13-years of experience in foreign exchange trading.
According to EuroFX CEO David Byrne, the company had special techniques to trade foreign exchange. However, now he says he was only a “consultant CEO” of the Euro Forex Investment Ltd, which is registered in the UK.
Also: SEC Ex-Football player Ponzi Scheme
EuroFX Scam surfaced in the middle of 2013. In July 2013, EuroFX announced to the investors that it is suspending its foreign exchange trading activities. After that, investors could not access their money, as their balance on the broker’s website froze. Customers started to write complaints against people who recommended the company. There are currently 23 people who police are intending to arrest. Many of those people who fundraised for EuroFX have fled the country.
Current law enforcement authorities say it was a pyramid scheme as it used the cash from new investors to pay the older ones. So far the police received at least 319 complaints about EuroFX. The estimated loss equals to $70 million (455 million yuan). However, some investors say that it’s just the tip of the iceberg. A group in Shanghai collected the information about at least 3,700 victims all over the China and 9 countries starting with the U.S. to the Philippines. All of the victims say that they were also scammed by the EuroFX.
“I Trust Europeans”
This is NOT the first fraud in China that involving a Western company and a Western figurehead. The story demonstrates quite clearly that fraudulent firms can hide now in the gaps between the local regulations. EuroFX advertised itself using the address in London, however, the British authorities considered it beyond their jurisdiction as the firm dealt with the foreign investors.
The Chinese investors who put money into EuroFX stated that they did so as the company was registered in the United Kingdom. They assumed it was regulated by the Britain’s regulatory entities. One of the customers who invested around $120,000 in the firm said that he did not understand how Forex works but believed that the scheme was reliable:
“I trust Europeans not to lie to me.”
However, EuroFX has registered itself in “business support” sector not finance. It would be regulated by the FCA only if it would sell to customers in Britain. But the UK regulator warned investors in the UK in early 2013 that Euro Forex Investment Ltd is “providing financial services or products in the UK without our authorization”.
Meanwhile, the UK police stated that they have received complaints about the company Britain’s national reporting centre for fraud, ActionFraud. However, they decided it was outside of their jurisdiction. A spokeswoman for London Metropolitan Police said:
"The decision was taken for this investigation to be conducted by the Chinese authorities as the large majority of victims, in this case, are resident within China."
Think we missed something? Let us know in the comment section below!