Much has been said about the broker 4XP (Forexplace) and what happened with this company and its customers. Certainly it is a clear example of the care that must be taken when choosing a broker and put our money in their accounts. Previously we had 4XP on our list of Forex brokers and we promoted its services but after seeing the damage it was causing to customers around the world we decided to remove all related information.
Although Forexplace remained operating for years, almost from the beginning showed a low level of transparency and aggressive marketing practices. Plus it was not installed in any country with strict controls on financial services, so it is logical to assume that it had no real control, at least none important. We include an update with an overview of what happened with 4XP, so that the readers comes to understand that it is important to analyze carefully where they are placing their money before facing problems.
Loss of license of 4XP
In October 30, 2013, the British Virgin Island Financial Services Commission, the regulatory body for financial services in the British Virgin Islands, said that 4XP does not and has never had a license or any regulation from the agency and so it could be effecting unauthorized transactions in financial services (Public Statement of the FSC).
In our review of 4XP we indicate that this broker was regulated by the FSC, as this information appeared on the website of the broker (it seems that it still does). Apparently, 4XP blatantly lied and had a trademark company without a license to provide financial services. Not only that, in October 1, 2013, CySEC, the Cyprus regulator, issued a warning saying that investors should stay away from 4XP and this company was not licensed to do business in the country.
Shortly thereafter, 4XP sent a letter to its customers which reads:
The Company has received an immediate and surprising cease order, issued by the British Virgins Islands FSC, ordering the Company to cease its trading services operation. The Company has applied to the FSC against the order, and is considering other legal venues to renew its operations.
Due to the above order, banks and other financial institutes have frozen the Company’s accounts. Furthermore, the Company’s funds with liberty Reserve have being frozen as well, due to the procedures filed against Liberty Reserve and its officers.
As mentioned above, The Company is making efforts and taking actions as necessary in order to have the FSC order cancelled, and negotiates with its banks to have its Accounts reopened. According to professional legal advice provided to the Company, such actions shall take a few months at least. In the meantime, the Company must honor the order.
Due to the above, the Company is currently unable to process deposit and withdrawal requests, until further notice. The Company hopes such notice shall not take long.
As you well know, the Company has always been proud of its honesty and integrity. The Company trust that you understand that the events are beyond our control and cooperate with the Company’s efforts, and we regret any inconvenience caused.
Despite this letter to try to reassure their customers, 4XP ceased operations and many customers were pressed to recover their funds. In many cases, these traders could not get their money.
Therefore, the lesson is clear, seek brokers who are regulated or at least have a good reputation.
