Illegal B-book Broker Brought to Justice After Scamming 346 Million Yuan

Source: Fazzaco 2020-07-13

A fake B-book forex broker called Suhui Currency falsely claiming to be an authorized trading platform was alleged of fleecing over 346 million yuan out of more than 10,000 investors. As a matter of fact, it had no access to any liquidity provider or bridge provider in the real forex market.

The scammer surnamed Chen, whose evil conduct constituted criminal fraud and caused massive social influence to the public, was sentenced to a lifelong imprisonment, lifelong deprivation of political rights, and confiscation of all personal property. He and his accomplices were ordered to refund all the money scammed.

The alarm was first sounded by a branch of the State Administration of Foreign Exchange (SAFX) who found Suhui Currency was involved in online forex trading through deceptive advertising, which was beyond its business scope. It was required to correct its unapproved business and deprived of franchise for domestic and foreign currency exchange for individuals.

The case caught the attention of the police. The fake broker collapsed after Chen and his accomplices were arrested. In total, over 17,000 victims invested more than 875 million yuan for forex trading but only withdrew less than 500 million yuan.

To maximize profits and shirk responsibilities, the big boss Chen designed doublespeak to mislead the investors. Trading terms such as “buy”, “sell”, “close position”, and “deliver” were replaced by “pre-purchase”, “pre-sell”, “rescind reservation”, and “offline reception/payment”.

Suhui Currency charged any investor with 8,000 yuan as margin, 600 yuan as formality fee and 250 yuan as spread for trading 1 standard lot, and 16,000 yuan as margin, 1,200 yuan as formality fee, and 750 yuan as spread for trading 3 standard lots. In other words, more trades would cost more formality fees and spreads.

Chen had kept on plotting the fraud for a long time. He was a senior manager of Beijing Gold Exchange and even had a chauffeur, but feeling discontented, he still wanted to reach another summit in life. He bought a business service company in Xiamen and changed its name to Suhui Currency to take advantage of its currency exchange franchise.

Within four months, he gathered his former colleagues who were veteran traders in financial speculation and decided to establish a forex margin trading platform to seek illegal gains from investors.

After mapping out the plan, he contacted Aolin Company, a software provider, to develop a forex trading system, in which spreads, exchange rates, and candlestick charts could be manipulated.

In advertising, Suhui Currency claimed to be China’s first authorized forex trading platform and concealed all the standards of calculating formality fees and rollover rates to win trust from investors. It also solicited customers through membership and IB system and established 5 operation centers and over 20 membership companies.

As early as late 2013, some investors consulted the legality of Suhui Currency on FX110, and in many answers and passages, we pointed out that it was a fake broker.

It is known to all that China has not opened the retail forex market, so Suhui Currency’s boast of “China’s first authorized forex trading platform” would surely be a sham.

The underregulation of China’s retail forex market has led to the rampancy of scams. As the proverb goes, “better safe than sorry.” Please be careful when selecting a forex broker and check related information such as its regulatory body, spreads, rollover rates and cost. Don’t fall into the trap set by criminals.

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Illegal B-book Broker Brought to Justice After Scamming 346 Million Yuan

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