This is the second part of our series about CySEC Scam Tourism which has its roots in the era of binary options. In this period between 2010 and 2017, mainly Israeli financial entrepreneurs came to Cyprus en masse to set up their CySEC regulated Binary Options Brokers. Forensic analysis suggests that an estimated 95% of all binary options brokers were scams. Simona Weinglass, an investigative reporter of The Times of Israel, called it Israel’s vast and amoral scam industry. The CySEC has not made things too difficult for these foreign binary options scammers and is still a very relaxed regulator.
The relaxed CySEC approach actually constitutes a severe problem for the EU financial markets and imposes an direct and immediate danger to investors and consumers in the era of cyberfinance. Cyprus was and is the gateway to EU’s single financial market and its more than 445 million citizens for many cybercriminals and scammers. Today we want to use the CYSEC-regulated Maxigrid to uncover that scams are still tolerated in Cyprus even in the post-binary options age.
The CySEC Disgrace
In December 2019, the Italian CONSOB has taken the first measure against CySEC and its subjects. As a precautionary measure to protect Italian investors, it has banned the CySEC-regulated Rodeler Ltd and Hoch Capital Ltd along with their brands from the Italian market. CONSOB said that it did so because the companies have been repeatedly violating the Italian regulations despite CySEC issued in response reports sent by CONSOB to the CySEC.
On June 1, 2020, the FCA announced that the three CySEC-regulated investment companies (CIF) Rodeler Ltd, Hoch Capital Ltd, and F1Markets Ltd would be banned from operating in the UK. Within hours after the FCA announcement, the CySEC announced a temporary suspension of the CIF licenses of these companies. Rodeler and Hoch Capital then voluntarily renounced their CIF licenses and will wind up the business. The suspension of F1 Markets Ltd, however, was recalled on June 16, 2020. The company may continue to operate as a regulated broker with its brands F1Markets, StrattonMarkets, 24CM, Investous, and EuroPrime.
It is a disgrace for any regulator if its licensed an to be supervised subjects constantly violate the rules in other regulatory regimes and attack foreign customers. It is a sign of incompetence if the home regulator is not able to stop these attacks on citizens in foreign jurisdictions. The actions of CONSOB and FCA have publicly demonstrated the helplessness and/or unwillingness of CySEC.
Law Enforcement agents in various EU countries have frequently expressed their anger about the work of CySEC. In their opinion, CySEC with its relaxed supervision facilitates violations of regulatory requirements and the resulting fraud to investors.
The actions of the FCA were apparently a well-understood signal to other CySEC companies to quickly withdraw from the UK to avoid a ban. On 15 June 2020, the FCA announced that it had been informed by CySEC that three other CIFs would voluntarily cease their activities in the UK:
- Maxiflex Ltd as of 4 June 2020
- Maxigrid Limited as at 5 June 2020
- Reliantco Investments Ltd as of 11 June 2020
The FCA license register entry was set to the status “cancelled.” The voluntary withdrawal from the UK market may have prevented the three CySEC companies from being blocked by the FCA. For the CySEC this is one less potential inconvenience.
The two companies Maxigrid and Maxiflex are regulated by CySEC and controlled by an Israeli network. Officially, the beneficial owner is the Israeli Roy Almagor, 53, who is also a director in the companies. Maxigrid is a remnant of the gigantic 4XP Forex scheme around Aviv Talmor, Yossi Herzog, and their former partners. The company was founded as AGM Markets Ltd. and received the CIF license 145/11 from CySEC in May 2011. Maxiflex Ltd was established as Maxiflex Global Investments Corp Ltd and was granted the CIF license 258/14 in Nov 2014.
Roy Almagor is part of a vast and powerful Israeli network and deploys its resources. The technology and services for operating the websites of Almagor’s regulated brands are provided by companies controlled by his partners. One of these companies is Antelope Systems Limited, registered in Cyprus, which provides the CRM platform for the brands. Antelope Systems is one of the leading CRM providers in the forex industry.
For the operation of the EuropeFX brand, Almagors regulated Maxiflex Ltd works with tied agents. In Cyprus, the CySEC-regulated brand EuropeFX is operated by the Cyprus call center operator Batchimo Limited headed by the Israeli Yarel Keha (see OpenCorporates). In Germany, EuropeFX is operated by the call center operator SF Market Services Europe GmbH (www.sfmarketsde.com) in Berlin. This company is listed in the German company register Northdata as related to the German CC Markets GmbH which is also controlled by Almagor’s partners.
It is these tied agents who actually operate the boiler rooms (call centers) for the brands and are therefore the actual operators of the brokers. Whoever controls these Boiler Rooms also controls the broker brand. In this case EuropeFX.
Scam activities of Maxigrid
In recent months, Maxigrid has attracted attention by getting involved in forex and broker scams. Until recently, Maxigrid ran the unlicensed crypto platform BitandBuy (www.bitandbuy.com). This was allegedly a joint venture with an unknown partner. Through BitandBuy, investments were made in scams such as the RoyalsFX scam. More and more scams are going over to carrying deposits and investments from customer victims via crypto platforms. This is intended to help cover their tracks.
The BitandBuy platform has now disappeared without a trace and without further explanation from Maxigrid. The damage for the victims of RoyalsFX remains.
Maxigrid has also been involved with the LincolnFX broker scam. Via Maxigrid‘s bank account at the Lithuanian e-money institute GlobalNetInt UAB, payments from LincolnFX victims were processed and forwarded to the scammers.
The money has disappeared without a trace and the victims have so far complained without results.
These activities of Maxigrid in the scam segment were not one-time events or errors. The number of transactions and the duration of involvement in the scams show that the involvement of Roy Almagor’s Maxigrid happened knowingly and intentionally. This is also confirmed by the numerous emails that FinTelegram News has received.
A weird legal opinion
However, the documents may have disappeared, as a curious legal opinion by Cypriot lawyers Nicolaou & Associates has confirmed that there have not been provided documents related to scam activities. It does not give a legal assessment of the situation with the BitandBuy and the payments for LincolnFX. The Maxigrid management actually didn’t ask for legal opinion on the transactions in question. On the other hand, it confirms that no documents were found. Weird to the bones, isn’t it?
For this opinion we are taking into consideration the provided by the Company agreements and of documentation with third parties.
We have reviewed the provided documents and agreements and we confirm that we haven’t found any third-party agreement and or document and or documentation related with a non-regulated and or non-established Companies.Legal Opinion Maxigrid issued by Nicolauo & Associates
We asked Jekaterina Pedosa, the CEO of Maxigrid if the operation of the crypto platform BitandBuy was approved by CySEC. She has answered in the affirmative. Everything would have been disclosed properly to the CySEC and checked, Pedosa answered. The fact is that the domains connected with the BitandBuy platform www.bitandbuy.com and https://crypto.maxigrid.com were not approved by the CySEC. They were and are not registered as approved domains on the CySEC profile of Maxigrid.
Pedosa and Almagor could not explain their involvement in the LincolnFX and RoyalsFX scams and did not comment on the available evidence. CySEC should also take a closer look at this.
The scam activities of Maxigrid’s are now a case for the FinTel Ombudsman Service, recently created by FinTelegram News and the EFRI NGO. You can find the latest information here.