BaFin, the financial regulator of Germany has decided to suspend any sort of business done through the broker FXdirekt Bank. The decision was made public through an officially released moratorium of BaFin. Incidentally, FXdirekt was accused in the expose story of business portal Wirtschafts, released in last October. As part of the expose story, several existing and former clients and customers of FXdirekt were interviewed by Wirtschafts.
If the expose story is to be believed, FXdirekt had fine-tuned the scamming procedure. It had claimed of larger profits than actual and also used some aggressive marketing techniques. Several other unlawful methods were used by FXdirekt, as mentioned in the expose story.
The biggest fraud that FXdirekt was doing was probably showing delayed feed for the demo platforms. The sales people were actually talking with prospective clients on phones and watching the real prices at the same time. Therefore, they knew where a particular trade is heading towards and that information was shared with the demo account users. This helped the broker to gain faith of the prospective clients. Incidentally, since the expose story was published; BaFin started its own investigation on FXdirekt and its functionalities.
BaFin has come up with the decision that following the operating losses that FXdirekt has incurred in this year, it does not have good enough capital to continue its normal operation. Hence, the regulators decided to put it into a liquidation mode and also ordered the same to cease its daily operations. On the homepage of its official website, FXdirekt has already published this directive of BaFin. If the statistics published in the press release of BaFin is taken into consideration, FXdirekt had 3200 active traders and a total asset value of €37.4 million. Around €17.2 million of the total asset was in customer funds.
BaFin, in the official press release, however refrained from making any comment on the allegations made by Wirtschafts. It didn’t elaborate on whether legal actions on FXdirekt will be taken either. Hence, right at this point of time, it is hard to decide whether the number crunches were the real reason behind the suspension of FXdirekt, or, the regulator made this hard decision as it wanted to protect the investors from the broker’s alleged malicious activities. So far, no official statement has been released on this suspension by FXdirekt officials.