Going offshore to escape the CFTC

Broker Discussion Forex Brokers
7161

re: COINEXX BREACH

Of course not.
Prior to Coinexx’s recent enhancements to security, the
protocol was to send an email prompt (I believe) to confirm
the request.

My understanding was that any request would need to be initiated
from within their web portal login ( Coinexx dot com ) which
they would have been able to do, since they had stolen the
login credentials. What I find weird is that the request appears
to have been initiated by an email message, which Coinexx
provided us, as we tried to find out what had happened.
HERE IS THE FORGED EMAIL WHICH CONEXX PROVIDED.
Their claim was that because the request had come from the
registered email address, they were bound to honor the
withdrawal request, yes, as incredibly as that sounds. By the
way no such email was sent from the real email account,
and examination of the email headers (not provided)
would probably have shown that. (I don’t want to go deep into
a rat hole on this…) From Coinexx, in response to our
challenge that the email request was fraudulent:

Dear [client],

Kindly refer to the following email for the withdrawal request we received
from your registered email address. The withdrawal was only processed
after we received the withdrawal request from the registered email address.

Best Regards

Support Team!

On Fri, May 17, 2019 at 7:30 PM [client] <[client]@protonmail.com> wrote:
Account ID - XXXXXXXX
Amount - USD 97
Bitcoin

1NwX7NSmYBKhxZzdu4Y8QeRU7LD13xFphV

Sent with ProtonMail Secure Email.

NOTE THE TERSE “MACHINE GENERATED” NATURE OF
THE ALLEGED WITHDRAWAL REQUEST. NO SUCH
EMAIL WAS SENT FROM THE REAL EMAIL ACCOUNT.

[EDIT] apparently they are not aware that email return addresses
can be spoofed fairly easily !! incredible their security
staff overlooked that simple fact, but apparently true.

'Nuff said. The important thing is that Coinexx has now allegedly
instituted better security on withdrawals. I don’t know exactly
what they are now, but this was a clear failure in their Security
on funds withdrawal.

hyperscalper

7162

KEYLOGGERS – SLIGHTLY OFFTOPIC BUT RELEVANT

My friend’s Coinexx username and password were stolen
through a Key Logger. This KeyScrambler product claims to
make it nearly impossible for an implanted KeyLogger to intercept keystrokes which are encrypted (cloaked) through this product.
(Yes, obviously we have to trust this product isn’t a KeyLogger
itself !! ) Microsoft Windows users only.

A FREE for Personal usage utility for Windows users is
Key Scrambler
This is an “always on” browser field entry protection mechanism
which should thwart most, if not all keylogging attempts in
browsers. [EDIT] Actually it can be toggled on/off …

Downloadable FREE with free licensing, from this link:
https://www.qfxsoftware.com/download.htm

I have done so, and have verified that it works in all of my
browsers, Chrome, Firefox, Opera and is also fully compatible
with usage of LastPass Password Manager, which I would
also highly recommend or an equivalent product.

I’m strongly recommending the usage of these two products,
or similar ones, since most of us are too relaxed in our
"Operational Security* OpSec methodology as we happily
surf the internet !!

hyperscalper

1 Like
7163

Well BLOW ME OVER!!!

@Clint. What is the below all about??? Do you know anything about them??? I’m asking (obviously) because of our previous discussion regarding the CFTC and there being no client fund protection or guarantees. Only stumbled across this because somebody sent me a link to look at something and this was on their website.

https://www.sipc.org/

And take a look here (spot your broker):

https://www.sipc.org/list-of-members/

I already found Tradestation and TD Ameritrade. GAIN Capital. Interactive Brokers.

And the site states “All registered brokers or dealers are SIPC members by law, with some exceptions.” (there is a clickable link for the exceptions).

7164

another added protection is to use **epic privacy browser, google it

7165

SIPC is great for stock and bond traders who trade through domestic U.S. brokers.

It provides no protection for forex traders who trade through domestic U.S. brokers.

Offshore brokers (who are the focus of this thread) are not eligible for SIPC membership.
Furthermore, the clients of offshore brokers are not protected by SIPC, regardless of the markets/exchanges/instruments they trade.

SIPC webpage — SIPC - What SIPC Protects

SIPC
SIPC757×747 96.6 KB

(click the image to enlarge it)

7166

Hi Clint…

Alirght. Go it now.

I did spend time looking through the list of brokers and actually did notice (after my post to you above) that none of the better known FOREX brokers were listed e.g. GAIN is listed but not FOREX Dot Com so the distinction between the two is pretty much made right there I guess.

Must say though: I think the likes of TD Ameritrade could be a little more specific about this. It is an easy mistake for somebody to assume when just looking at their website that this is not the case. Then again: demonstrates why it’s so important to read the fine print.

Ah well. Sorry folks. Thought I’d made a breakthrough for you all. Evidently not the case.

7167

I’m not sure if any of you are familiar with Tone Vays. I know he does a lot of law review of bitcoin, I will give him that credit. He was liquidated and kicked off bitmex for being an american resident despite spending most of the year out of the country.
I heard him talking about how he is renouncing his citizenship in order to trade on a derivative platform. This is where I’m confused. How is he claiming that you need to renounce your passport. I’ve heard some of you say that the exchanges will ask you for the passport and hold the original country of origin against you even if you’re a full time resident in Europe with a euro tax number/visa, but I’ve also heard some of you say that you can register with a foreign company that you are the owner and director and beneficiary of and that the exchange doesn’t seem to care.

Do the forex broker really discriminate against full time visa holding americans living in europe just because of passport? How does that work out.

7168

Upon the expiration of this definition on October 9, 2013, the “U.S. person” definition set forth in the Final Guidance will apply. The Final Guidance provides that the CFTC will interpret the term “U.S. person” generally to include, but not be limited to:

(i) any natural person who is a resident of the United States;

(ii) any estate of a decedent who was a resident of the United States at the time of death;

(iii) any corporation, partnership, limited liability company, business or other trust, association, joint-stock company, fund or any form of enterprise similar to any of the foregoing (other than an entity described in prongs (iv) or (v), below) (a “legal entity”), in each case that is organized or incorporated under the laws of a state or other jurisdiction in the United States or having its principal place of business in the United States;

(iv) any pension plan for the employees, officers or principals of a legal entity described in prong (iii), unless the pension plan is primarily for foreign employees of such entity;

(v) any trust governed by the laws of a state or other jurisdiction in the United States, if a court within the United States is able to exercise primary supervision over the administration of the trust;

(vi) any commodity pool, pooled account, investment fund, or other collective investment vehicle that is not described in prong (iii) and that is majority-owned by one or more persons described in prong (i), (ii), (iii), (iv), or (v), except any commodity pool, pooled account, investment fund, or other collective investment vehicle that is publicly offered only to non-U.S. persons and not offered to U.S. persons;

(vii) any legal entity (other than a limited liability company, limited liability partnership or similar entity where all of the owners of the entity have limited liability) that is directly or indirectly majority-owned by one or more persons described in prong (i), (ii), (iii), (iv), or (v) and in which such person(s) bears unlimited responsibility for the obligations and liabilities of the legal entity; and

(viii) any individual account or joint account (discretionary or not) where the beneficial owner (or one of the beneficial owners in the case of a joint account) is a person described in prong (i), (ii), (iii), (iv), (v), (vi), or (vii). [7]

1 Like
7169

It’s example 7 of dodd frank I don’t get it says “if the account if the ultimate owner is american” … Even if the account is in the IBC’s name?

I actually think with a good law firm ,doing everything above board, a cayman bank business account wouldn’t be impossible… one of my current plans. Hell I pulled this off irs.gov 3W1XUW.99999.SL.136 Global Fedelity Bank Ltd. Cayman Islands

It might be easier to do it in Singapore. But in any case that’s the gist.

7170

you can set up an IBC with a Nominee Director this person name can be on all documents to hide the true owner ID but there can be trust issues with that .

7171

I went heavy into researching this 2 years ago…

Setting up the IBC was no problem. Banking (FATCA compliant, accepts US residents, wires into US possible) was actually also not an issue… well not an issue if you have the ability to deposit >30-100K and never withdraw that initial deposit until account closure on top of paying high account maintenance fees.

The problem was actually brokers. Every major EU/UK/AUS broker I contacted would not open a corp account for a foreign IBC with US citizen as signatory/ultimate beneficiary unless that US citizen was ECP Qualified and exempt from DOD Frank regs. Using a nominee gets around the issue since their non US documentation would be on the accounts, but that opens up the risk of fraud or blackmail.

The other potential problem was owning a foreign controlled corporation (>50% owned) as a US citizen basically flags you as a criminal to IRS until proven otherwise. Form 5471 is so tedious and intrusive it might as well ask you for finger prints and a blood sample. Multiple future audits are in your future owning a FCC.

Quite honestly, after EU & UK regulations matched the US, I completely lost interest in the subject.

1 Like
7172

Bitmex does not require KYC. However, they may ask for it if they suspect that you are based out of a prohibited jurisdiction (or for any other reason). What KYC that they may request is unknown to me. Vays has a huge online presence and likely brought about unwanted attention to himself. Renouncing citizenship in such a case would likely stem from other reasoning that goes beyond the simple ability to trade via Bitmex, since careful use of a VPN would likely allow for trading again.

There are a few countries that will allow you to buy into citizenship, where you can get a foreign passport and come and go as you please, for the right amount money. I know of a fellow that went this route a few years ago, that was dealing with large amounts of cryptocurrency.

Exchanges may operate differently than individual brokers, especially when you are dealing with crypto-only exchanges, as the laws and requirements may be different.

Whether an exchange or a broker will prohibit trading based on the origin of your passport will first depend on whether or not that broker or exchange will require KYC in the first place and whether or not the KYC requirements involve providing a passport. Anything beyond that will likely depend on risk tolerance and may vary.

There may be little that the CFTC, any broker or exchange can do should you choose to trade via proxy. With the ability to withdraw/transfer to/from any anonymous crypto wallet, where funds can be dispersed as needed, there is likely little that can be done to try to reveal the man behind the curtain in such cases. I cannot attest to the risks or legalities of going this route (nor can I advise it).

7173

I’ve been pretty livid lately. The ultimate conclusion is that - bitmex is not going to be anonymous much longer. With the proposed travel rule implementation by FATF, most of the financial anonymity of crypto is set to end. It’s a very devastating new set of rules. I wouldn’t be surprised if our offshore forex exchanges end up removing bitcoin as a deposit and withdrawl option once the laws finally get passed, because the regulatory burden is going to be staggering. Coinbase and Kraken said that they think it will require an entire parallel system of communication between global major exchanges to be implemented

FXchoice is the exception. I’ve never seen any, and I mean any high leveraged bitcoin product on an exchange that willingly accepts american kyc. I strongly suspect Coinnexx only offers 5x leverage on bitcoin because they are terrified of attracting attention.

7174

those last few words are almost entirely why the FATF came out with new regs, they want recipient wallets to be kyced.

Mr Invisible seems to be right. Audits plus basically being unable to consider a IBC a non us person. They have a term for it. A subsidiary. Either way clearly the big forex brokers in EU have a correct interpretation of what CFTC meant.

There is one ECP exemption and that is retirement accounts. Thats the only conceivable option I see remaining. Possibly one other option is working with certain prop firms.

For all accounts and purposes it looks like Americans are about to be banned from crypto derivatives 100%, with no comparative not even like Forex.com or Oanda just zip zadda nothing. 100% barred from the game. I’m about as furious as I’ve ever been.

7175

Even in such cases where wallet holders may need to be identified (which I believe is unnecessary and invasive), trading via proxy will render such requirements moot. If you have a good trading record, then it should be very easy to find someone that is willing to partner with you. If you cover the capital, then it should be even easier. Saw an old interview the other day, with Jack Schwager, the author of Market Wizards, talking about a service that he created that is capable of monitoring trader performance across multiple brokers that can be used to link investors with traders and vice versa.

.

I do not think that this will happen. Even if laws are passed that will allow for more regulatory control over various exchanges and brokers, there will always be exchanges and brokers that will try to work around those laws by operating within a jurisdiction that will allow them to conduct business legally and without drawing much, unwanted attention. Others may continue to conduct business in the shadows, using anonymity and decentralized exchanges as cover.

7176

Coinbase and LedgerX have alluded to retail derivatives…or and options and futures…god only knows when regulators will let them

The bitcoin option platform is incredible for those attuned to it…if ledger X were to go retail and get good liquidity…aaaand I;ve always been to afraid to leave money on the options platforms that will ban me if they catch me…

the proxy i s something to chew on… I don’t know any other traders irl…trust is a huge issue…but I’m keeping all my options on the table.

7177

Things just keep getting better. I have no issues with paying taxes (when taxes are owed). The fact that our government can tax anything that might hold value to someone is a topic in of itself. What is important to note here, though, is the point about Gary Alford, the agent that helped bring charges against Ross Ulbricht. Anyone familiar with Ulbricht v. United States is probably aware that authorities conducted illegal search and seizure and violated constitutional rights. The case should have been thrown out.

If you guys feel that these crypto posts are too off-topic, then I will try to refrain from posting them. Personally, I feel that this is where things will be going though, as we continue to rely more heavily on offshore brokers and limited money transfer methods.

7178

The SEC and CFTC quite clearly think crypto is germane. They are letting me know. Binance is shutting down to Americans in September and opening up a nanny state branch in the us. This is the future.

LedgerX, Seed CX, and Erix X are in the application process for derivative trading with crypto. If a CFTC compliant triple licensed derivative exchange for bitcoin option, swap, future, and derivative gets passed and onboarded with bitcoin denominated derivative products such as arthur hayes has alluded to, and security tokens, and other futures, just like Coinexx - it will be Ledger X or a competitior.

Ledger X Omni for Retail is literally just waiting on the third CFTC license, and that same DCM license was already given to Eris X, which conversely does not have a DCO license, that LedgerX has.

It’s a matter of lobbying them heavily to prevent an Forex repeat. Although I am absolutely hoping that a dozen coinexx’s pop up. Coinexx would offer 100x but they are afraid, and rightly so.

Although nanny sttate margin is terrible, with bitcoin I can make a case that putting a 100 grand on Ledger X to do options and low leverage future would be at least as profitible as forex, marijuana stocks, and conventional commoditie.

1 Like
7179

There are some brokers/exchanges that currently offer decent leverage options for cryptocurrency trading, but either the spreads are a joke, the trading fees are too high, the volume is too low or they do not accept US traders etc…

With regard to crypto, I expect that we will see more options available to US traders soon, but I anticipate the worst regarding what offerings may be available or what requirements and limitations may be placed on it etc…

Where cryptocurrency may currently lack in volume and liquidity, it may make up for with market volatility and heavy valuation fluctuations. The long-term appreciation potential for cryptocurrency is massive. That being said, I can trade SPX/USD and see pretty similar gains, depending on what leverage is being used.

I believe that we will continue to see more offshore forex/cryptocurrency brokers and exchanges become available in the future. I believe that we are already beginning to see cookie-cutter sites popping up…some may even be the same operators conducting business under a different name, while trying to stay under the radar.

Something really needs to change, though. Some laws are designed for safety, which is understandable, especially when referring to physical safety. However, laws pertaining to financial safety should have an opt-out clause. I should be able to invest my money how I see fit. Some might say, well, the laws are not prohibiting you from doing that…they are restrictive to service providers and products etc… In my opinion, that is little different to having a law prohibiting people from accepting money from strangers. The law is not prohibiting me from doing what I want with my money, should I choose to donate it to a stranger in need…but the recipient of my money just cannot legally accept it. Yeah, right…

7180

Agreed. I spoke with a rep at Gain regarding their DMA awhile back. The margin multiplier is ludacris. Then you factor in things like FIFO… would never give them a dime. Great platform and customer service but just not feasible.