Washington, D.C. – Switzerland-based LYFE, S.A., the successor in interest to Ireland’s Squared Financial Services Limited (SFSL), has been slapped with a $175,000 penalty by the Commodity Futures Trading Commission (CFTC) for operating as an unregistered futures commission merchant (FCM) and failing to implement adequate anti-money laundering (AML) procedures. SFSL, which is no longer operational, offered leveraged gold, silver, and foreign currency transactions to U.S. customers and commodity pools without proper registration.
The CFTC order details that between November 2017 and January 2019, SFSL facilitated off-exchange transactions in forex and precious metals with several U.S.-based commodity pools via its online trading platform. The firm also failed to conduct metals transactions on a registered exchange. Crucially, SFSL accepted funds to margin these trades without registering as an FCM with the CFTC, a direct violation of the Commodity Exchange Act (CEA) and related regulations.
Beyond the lack of registration, the CFTC found SFSL’s AML oversight to be severely lacking. The firm failed to adequately investigate an unregistered commodity pool operator (CPO) and commodity trading advisor (CTA) despite indications they should have been registered. SFSL even allowed the CPO and CTA to open accounts using application forms specifically labeled for “Unregulated Entity” use. The firm continued to allow accounts to be opened even after the CPO and CTA had lost the majority of invested funds, and utilized an unregistered introducing broker with a history of forex-related issues.
As part of the settlement, LYFE is required to pay a $175,000 civil monetary penalty and disgorge $37,014.81 in ill-gotten profits. The firm must also cease and desist from further violations. The CFTC noted that LYFE’s penalty was reduced due to “substantial cooperation” during the investigation.
“This case underscores our relentless efforts in holding firms—wherever located—accountable for entering our markets without authorization, and for stumbling in their critical AML responsibilities,” said Ian McGinley, Director of Enforcement at the CFTC. “Firms entering our markets face a binary choice – play by the rules on a level playing field, or, face enforcement.”
Source: CFTC.gov
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