The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against JAFX, Ltd. (also known as JAFX, EOOD), alleging unregistered forex dealing and failure to provide required risk disclosures to U.S. customers. The complaint, filed July 27, 2018, in the U.S. District Court for the District of Utah, details a scheme operating from at least September 2016 through the present.
According to the CFTC, JAFX operates as a retail foreign exchange (forex) dealer without registering with the agency, a violation of commodity trading laws. The company allegedly solicits orders from U.S. residents who are not considered “Eligible Contract Participants” (ECPs), offering leveraged forex trading accounts through its website and promotional videos on YouTube. Customers can reportedly open accounts with as little as $100.
The CFTC alleges JAFX acts as the counterparty in these leveraged retail forex transactions, encouraging customers to access and trade via a mobile application. Crucially, the company is accused of failing to provide customers with the legally mandated Risk Disclosure Statement, leaving traders potentially unaware of the significant risks associated with leveraged forex trading.
The investigation highlights a growing concern within the CFTC regarding forex trading scams. The agency has issued several customer protection advisories, including a specific warning about forex fraud, noting a recent surge in related schemes. The CFTC urges potential investors to verify a firm’s registration status with the National Futures Association before investing.
The CFTC acknowledged the assistance of the Financial Supervision Commission of Bulgaria in the investigation. Timothy J. Mulreany and Paul G. Hayeck of the CFTC’s Division of Enforcement are leading the case. The agency encourages anyone with information regarding potential violations of commodity trading laws to contact them via their toll-free hotline (866-FON-CFTC) or submit a tip online.
Source: CFTC.gov
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