The US Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) announced that a federal court has ordered Valdas Dapkus and two of his companies to pay over $2.8 million in monetary sanctions for operating a fraudulent forex (FX) fund scheme.

Court Orders Defendants to Pay Over $2.8M for Forex Fraud Scheme

The Court for the District of New Jersey issued default judgments against Dapkus, Tradewale LLC, and Tradewale Managed Fund for soliciting members of the public to invest in a purported FX trading fund using false claims and misappropriating investor funds.

Specifically, the defendants were found to have made false statements that Tradewale had a “unique trading system” using “artificial intelligence” to generate high returns. However, most investors were unable to access or withdraw their funds.

“Tradewale also claimed it generated average monthly returns of 4%-11% and average yearly returns of over 55% with ‘minimal risk’,” the CFTC commented in the official statement.

Federal Court Orders Unregistered Commodity Trading Advisor, Its Manager, and a Managed Fund to Pay Over $2.8 Million in Monetary Sanctions for Fraudulent Retail Forex Fund Scheme: https://t.co/XurfDqbzZ1

— CFTC (@CFTC) December 28, 2023

The court ordered the defendants to pay $713,520 in restitution to defrauded investors and a $2.14 million civil monetary penalty. Dapkus and the Tradewale entities are also permanently banned from trading or operating in violation of commodity trading laws.

This judgment resolves a CFTC enforcement action filed in September 2021, charging the defendants with fraud, misappropriation, and failure to register. According to the complaint, none of the approximately 17 Tradewale investors received any returns, while the defendants misappropriated over $700,000.

The CFTC cautioned that the judgment may not result in investors actually recovering their lost funds. The agency said it will continue working to protect customers and hold wrongdoers accountable.

Prevalent Forex Scams in the USA

In the USA, the Forex market has unfortunately been marred by frequent and often more severe scams than previously reported. Just last week, Finance Magnates disclosed a major development where a US court ruled against Michael DaCorta. The court ordered DaCorta, three of his companies, and four other individuals to pay roughly $60 million. This penalty encompasses a permanent injunction, monetary sanctions, and equitable relief. Over 800 investors suffered losses totaling about $80 million due to these fraudulent schemes.

Simultaneously, the CFTC brought to light another case of forex fraud. The court issued a default judgment against Avinash Singh and his company, Highrise Advantage, LLC. The judgment includes a permanent injunction and monetary sanctions, addressing a complex, multi-level forex scheme involving $102 million.

In a similar vein, a federal court in November ordered an Illinois man and his entities to pay over $20 million for operating a Ponzi scheme in the commodity pool sector. Phillip Galles and his Chicago-based Tyche companies were found guilty of defrauding investors and violating regulatory laws, as announced by the CFTC.

These scandals emerged as the latest CFTC data revealed a slight uptick in retail forex (FX) deposits across six brokers in the US. October's figures showed a modest increase, recovering from September's low, with the total deposit amounting to $518.4 million. Despite this increase, the total remains relatively low in comparison to recent months, marking only a 0.4% rise from the previous month's $516.3 million.