Cambodian Forex Trading Company GFX Halts Operations

Fazzaco learned that GoldFX Investment (GFX), a politically connected Forex trading company in Cambodia, announced a "temporary" suspension of operations in March but has yet to resume service.

Local news outlet Voice of Democracy reported that GFX is blaming the trouble on three foreign former board members whom it claims embezzled $20 million from the company.

GFX says on its website that it has more than 30,000 clients and handles "diversified forex investments" on its trading platform. The minimum amount for an account is $1,000, and one local news outlet reported that at least $27 million was tied up in the company.

The scandal has turned a spotlight on the relatively new market for derivatives trading in Cambodia, and, experts say, highlights the risk that inexperienced investors may not understand what they are getting into.

The Securities and Exchange Regulator of Cambodia, or SERC, began issuing licenses for derivative traders in 2016. It has sought to promote the sector to retail investors, even holding roadshows throughout the country.

Regarding GFX, the regulator released a statement telling aggrieved investors to lodge an official complaint. SERC Director General Sou Socheat told the Khmer Times last year that the derivatives market grew from $5 million in 2017 to $200 million in 2019.

GFX did not respond to a request for comment. In a statement on March 31, it called on investors to join a legal case against the former board members whom it accuses of embezzlement.

Roum, the investor, said he does not believe the company's claims that it was also a victim. A medical professional in his late 30s, Roum said he invested $3,000 two years ago and had received monthly payments, but did not understand how the money was generated.

"Sometimes it was $150, sometimes $100 and sometimes less," Roum said. "They do [the trades] for you. My friend introduced me to investing. They said it was better than saving money in a bank."

He said that unless a resolution was reached, the scandal would scar many Cambodian investors. "If they can't solve the problem, people will be afraid to invest, even in good companies," he said. "It's a wound that needs to be healed."