There are more copycat broker websites out there than what we have talked about before. To say that it is worrying is underrated.

Unusually this morning, we woke up to find news from Turkish media, Hurriyet Daily News, on top of newsfeed entry for Forex. What makes us concerned is it's title, Unlicensed Forex Trader's Bankruptcy Rings Alarm Bells. Then when we read on the news entry for Forex Broker, there is another news from Forex Magnates that insinuates there are more copycat broker websites out there than what we have talked about before. To say that these news are worrying is underrated.

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Unlicensed Broker Bankruptcy

We are quite unfamiliar with Hedefonline that was said by Hurriyet to be the name of unlicensed forex broker that has gone bankrupt. It is safe to say that Hedefonline probably is one of many small regional brokers out there. But the number of lost money is not small at all. It was reported that 20 million Lira (more than 9 million USD) investment is lost. According to Hurriyet, they have failed to pay investors back since last summer. A quick check on the net found out that the website has been down since early December. Meanwhile, a victim said that he has not been able to withdraw his money since January.

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Hedefonline was established in Izmir, Turkey, in 2000. However, ten years afterward, Turkey capital market authority sued them, and they have to move out of Turkey to Cyprus on 2011. By then, it should have alarmed people, but there was mention that they hold license from Dubai (DMCC, DGCX). At this point, we are not sure whether the license is real or not, or whether there is two different companies under similar name, but the fact is this: although Hedefonline is not registered in Turkey, it succeeded in gathering clients from the country; then it got caught in trouble last year and bankrupted, while its clients' money lost without any hope for reimbursement.

As people who deal in financial instrument, we should be aware of the danger of associating with unlicensed entities. In some parts of the world, unlicensed equals with illegal, and that by itself conveys higher extra risk than its legal counterparts. The existence of a bonafide license will not guarantee broker's truthfulness, its financial stability, or our success in financial market; but it will go far in ensuring that someone out there is watching them from doing any misconducts in ways that we aren't able to.

Of course, we also acknowledge that in some countries, financial authority is not what they are supposed to be. It could be that they ban forex trading, or they limit financial transaction in ways that untolerable for you. In those cases, you may have chosen to deal with brokers that licensed abroad or even unregistered brokers. That's all right; we even promote a few of them. Sometimes track record means more than a single certificate. But if that is your choice, then becareful not to choose copycat brokers. There are some unregistered brokers who have been doing relatively good business, but copycats are those who intent to deceive you from the beginning.

 

Latest Broker Scams: Copycat Outbreak

Previously, CySec and HKMA have warned people of several websites that falsely copied the name of well-known forex brokers and appeared to be connected with bonafide financial institutions. Right then, it was still fit to be called case. But now, it seemed that it has became epidemic.

Two days ago (8/4), UK FCA released warning against IAF Capital Limited with virtual address at http://en.iafcap.com. The company is clone of a genuine FCA authorized IAF Capital Limited which located at http://www.iafcapital.com. In the same day, FCA also warned of another clone website, SVS Securities that have similar website URL with its original FCA licensed firm. The day after, one more clone uncovered, under the name of BlackRock Offshore Bullion Investment Fund that copied a genuinely registered BlackRock Fund Managers Limited.

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Comparison between IAF Capital original website homepage (top) and IAF Capital alleged copycat website (bottom)

During the same time, Maltese Authority, MFSA, published warning against FX Direct Dealer from http://www.fxdealer.us/ and Sky Forex from http://www.skyforex.org.uk/, as they are unregistered to provide any type of financial service by MFSA, although they claim to be licensed. It is worth to be noted that the both entities have similar name with certain globally famous and registered forex brokers.

We would like to take this chance to again remind you to beware of legit forex broker domain lookalikes. If you are a beginner trader, becareful in choosing your broker. You might be unfamiliar with broker brands and domains, but there are always people you can ask in forex forums. The least you could do is googling; the genuine ones are more likely to be found in the top entries. But to be more assured of your choice, if your chosen broker claimed to be registered somewhere, ask the aforementioned authority. If you found a link within an email, don't click it unless you are sure that it is genuine.

The more profit could be found in a business sector, the more people will seek it. It is what happened in forex and financial sector. Along with the advance of internet and technology as a whole, doing business in this sector is no longer the privilege of the rich in advanced countries. More and more people from all over the world wants to try their luck. As the result, it also has became more lucrative for scammers. In this circumstances, we could only tell you to take preventive measures so you won't be the next victim.



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  • Safe Trading (3): How to Recover from Forex Scams