Call us: 0800 347 257

The perils of online forex trading

Foreign exchange dealings and ‘paper’ profits 

Yves opened an account with World Wide Forex, an online foreign exchange trading platform, and deposited US$34,000 into the account.  A few weeks later, Yves made a number of trades and on the same day World Wide Forex froze his account.  Despite numerous requests for an explanation, several months passed while Yves was unable to access his account or withdraw any funds.  Yves believed World Wide Forex had frozen the account to avoid paying him the profits he had made.  Yves disputed World Wide Forex’s allegation that he had committed fraud to generate large profits. 


The complaint 

Yves complained that World Wide Forex would not reply to his emails questioning the freezing of the account.  Yves sought to have the account reinstated so that he could continue to trade.  Yves wanted the account balance restored to US$49,000, the amount he said was in the account when it was frozen. Yves also claimed US$50,000 for estimated ‘profits’ from the closed accounts and US$25,000 as compensation for the freezing of the account. 


World Wide Forex’s position 

World Wide Forex said it had frozen Yves’ account because he had fraudulently hacked into the trading platform to create extraordinary profits.  Despite requests to do so, World Wide Forex provided no evidence to support its claim. 


FSCL’s view and recommendation 

In conducting an investigation we rely on the co-operation of the parties to the complaint.  Although World Wide Forex provided some of the information we requested, it had failed to produce sufficient or compelling evidence that Yves had acted fraudulently.  In such circumstances we can only make a decision based on available information and in this case concluded that World Wide Forex was not justified in freezing the account.  

Under FSCL’s rules we can only recommend compensation for direct financial loss suffered as a result of a wrongful action.  We cannot award compensation for anticipated or ‘paper’ profits, or lost opportunity.  There was insufficient evidence that Yves had suffered an actual loss of more than US$34,000, his original investment.  We recommended that World Wide Forex should return Yves’ original investment of US$34,000 to him.  Taking into account the difficulty Yves had experienced in getting any explanation from World Wide Forex and noting it had held Yves’ funds for several months without supplying any evidence to support its allegations of fraud, we felt it appropriate that World Wide Forex pay Yves $250 as compensation for the stress and inconvenience experienced. World Wide Forex accepted the recommendation and agreed to release Yves’ funds. However Yves was not satisfied by our conclusions and the compensation recommended and chose not to accept the recommendation but to pursue another remedy.  This meant that World Wide Forex was not obliged to pay Yves the recommended settlement.