The information provided by Mr Green is totally incorrect, and Mr Green has exhibited a total lack of knowledge regarding the subject of offshore trading in his communications with Tallinex.
- it is absolutely NOT illegal for US residents to open / fund / trade FX accounts with offshore brokers
- the SEC / CFTC / NFA have no jurisdiction over offshore brokers
The ONLY reason why most offshore brokers refuse to accept US residents is because their jurisdiction requires them to be registered with a local regulatory body, and that regulatory body has stipulated that its members may not have US-resident clients. Such stipulation is made as a favour to the SEC (since there is no legal basis for such a rule), and affected brokers are forced to comply under threat of termination of their registration with the local regulatory body (which would find them trading illegally and subject to prosecution in their country of domicile).
This is why the offshore brokers that DO accept US residents are based in jurisdictions where registration with the local regulatory body is not a requirement (or, as in the case of Belize, the local regulator is not actually providing any form of regulation because members are expected to ‘self-regulate’).
As long as you report your offshore trading accounts and any profits / losses to the IRS then there is no issue but, being completely oblivious to the actual legal situation, Mr Green contacted Tallinex at the end of December and stated his intention to report Tallinex to the Enforcement Division of the SEC.
The SEC has subsequently contacted Tallinex regarding US-resident clients, but the communication made it quite clear that they were powerless to take action.
If anyone using the services of Mr Green is trading with an offshore broker then I would only state that you may be drawing unwanted and unneeded attention to your broker, and possibly their local regulator (in addition to receiving incorrect advice).