Caught on camera: Representatives of dodgy forex company showing undercover journalist how to make quick money Image Credit: Mazhar Farooqui/XPRESS

Dubai: Have you got an invite to a Special Forex Preview at a hotel in Al Barsha this weekend?

Be forewarned, the event is being hosted by representatives of the dodgy FXUnited who go around the world peddling dubious multi-level-marketing (MLM) schemes as legitimate foreign currency trading programmes.

A sting operation by XPRESS blew the lid off their racket when this journalist and US-certified professional forex trader Sara Waqar, posing as investors, met the sly operators at their hotel.

A Filipina member of FXActionTeam International, who identified herself as Miss May, introduced us to Allan, a self-styled Malaysian forex guru of Indian origin. Allan claimed he was part of FXUnited and had been camping in Dubai to prepare the ground for their public sessions on February 2 and 3 where UAE residents “will learn more about forex and have a recession-proof means of improving their family’s financial wellness.”

“Nearly $6 trillion is traded in the forex market daily and I can show you how to scalp some bits off it in a matter of minutes,” he began as he connected the hotel’s television set to what he said was a live trading platform.

“I will start with a $500 investment,” he said, clicking some commands on his computer. A few minutes later, his investment had swelled to $2,000.

“This is nothing. I have made up to $560,000 in a single day,” he said as he boasted about his extravagant lifestyle which he claimed had made all his neighbours envious.

Tall claims

“I don’t have to work for anyone. I have 3,800 traders under me. I make money every time they trade. I am my own boss. Now my mission is to share the secret with others,” he said.

“So what do we need to do to partake of this enormous wealth?” we asked naively.

“You need to open an account with us by paying $500,” he replied, claiming that the return on investments (ROP) would be generated through foreign exchange, specifically Capital Gain Auto trading (CGAT). You’d also get referral commissions to recruit new affiliates, via a binary plan.”

We pretended to be impressed as he waxed eloquent on the incredible profits we could make..

“Allan demonstrated how a $500 forex account ended up with an equity of $2,000 - a whopping 300 per cent return in minutes. One can imagine this kind of return on a high value account. He insisted that such returns are consistently possible, without making any reference to the fact that such high leverages can blow up your entire capital in smoke just as quickly,” Sara would tell XPRESS later.

During our meeting, Allan stealthily shifted to another trading account and showed six-figure returns made in a few hours. Sara, who has years of industry experience and is the founder of forex educational venture Trade in Peace, said she suspects it was a demo account with an equity of around $1 million.

“I reckon Allan thought that like most unsuspecting clients I would also associate the two accounts and believe that such returns were possible by just depositing $500 into a forex trading account. The fact is that such monstrous returns are consistent only on paper. As a forex newbie, you might be able to realise such returns one or twice in the wake of beginners’ luck, being blissfully unaware that your entire trading capital had been at risk.

Beginner’s luck

Just as there is a theoretical possibility of you winning a raffle every time you buy a lottery ticket, there is always a possibility of the market reacting in a favourable manner for you, despite its intricacies and inherent risk, and despite you having no trading knowledge. This is what scammers in the financial industry capitalise on,” she explained.

Sara said scamming brokers often misrepresent demo accounts as highly profitable live trading ones. Since both demo and live forex accounts look and work in the same manner, gullible investors are led to believe what they are seeing is real money, when in fact it is just a trading software (usually the Metatrader4) showing a demo forex account with a real account server and bogus electronic profit entries. There is no way for the investor to ascertain if the trading is real or not.

When we asked Allan if FXUnited was regulated, he claimed any broker who uses a Metatrader4 platform has to be regulated. “This is an outrageous statement as the Metatrader4 is just a broker solution trading software, whose licensing fee or white label must be paid for by forex brokers who wish to provide this platform to clients. Metaquotes, the company that invented this platform, is not a financial regulatory body and has never claimed to be one,” said Sara.

“I am convinced this is a scam They are offering 11 per cent per month with a capital guarantee on the original investment. If that’s not good enough, they are giving an opportunity to get bonuses from money invested by people you introduce,” said another forex expert.

Red flags

The FXUnited website has no information indicating who owns or runs the business. A New Zealand “certificate of incorporation” for the entity “United Global Holdings Limited” is provided on the website, however the relationship between the two companies is not clear.

Significantly, the Financial Markets Authority of New Zealand (FMA) has put FX United onto a watch list of “businesses to be wary of”.

“The FMA has received reports that United Global Holdings Limited, trading as FXUnited, has been falsely claiming that the FMA has endorsed the company as being legitimate and highly regulated. The FMA does not confirm legitimacy or endorse any entity in this manner. We recommend NZ consumers exercise caution when dealing with any business claiming to be endorsed by the FMA,” says a note on the FMA website.

Recently, the Central Bank of Malaysia (BNM) in Allan’s home country also added FXUnited to its list of “known companies and websites which are neither authorised nor approved under the relevant laws and regulations administered by BNM.

“The public is advised not to make any deposit or investment with individuals and entities that are not regulated under the relevant laws and should conduct the necessary checks with the relevant authorities if there are doubts regarding any schemes offered, ” it cautioned.


Sara’s top tip for you:

Aspiring forex traders should be careful when choosing a forex broker. Reputable forex brokers are licensed by a financial watchdog such as the Financial Conduct Authority (FCA) of UK, and have a solid reputation that speaks for itself and that is not tainted with exasperated clients, something that a Google search on broker reviews will reveal to you.



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