Abstract：A City of London finance firm has been accused of helping illegal Instagram traders scam hundreds of people out of nearly £4 million using shell companies in the Caribbean.
Some 1,250 people are believed to have lost sums from £500 to £88,000 when a seemingly successful foreign exchange investment scheme on a global trading platform called Infinox collapsed in 48 hours over Christmas 2019.
Many blamed 22-year-old ‘self-made’ Forex trader Gurvin Singh, who promoted the scheme to his 170,000 followers as a ‘copy-trading’ service which would mirror his moves onto their own accounts.
He was accused of covering up massive losses and duping investors into thinking the scheme was protected by the UKs financial authorities, when their money was actually sent to a broker registered in the Bahamas using the Infinox brand.
The Financial Conduct Authority (FCA) issued a scam alert against Singh and unnamed associates under his ‘GS3’ brand for ‘providing financial services without our authorisation’, which can lead to a criminal prosecution.
But a group of hundreds of victims, led by 24-year-old accountant Jonathan Reuben and IT manager Richard Ham, 35, claim their FCA reports stopped being investigated after a few weeks and that they cannot afford the fees to pursue Singh and Infinox through the courts.
Jonathan Reuben, who lost £17,000 through the scheme, said: ‘The only thing that’s still ongoing is a police investigation but I haven‘t heard anything from them in months either.’
Messages and adverts attributed to Singh said he and the broker he was working with were regulated by the FCA, which would have made clients eligible for the Financial Ombudsman Services and Financial Services Compensation Scheme should anything go wrong.
‘I believed him as I looked up the company behind Infinox and it seemed to be FCA-regulated,’ Jonathan added.
But Singh‘s sign-up links had sent them to ’infinox.bs‘, a website belonging to a Bahamian firm which trades as Infinox. It looked almost identical to ’infinox.com, then used by a British firm which also trades as Infinox and is regulated by the FCA.
Furious investors complaining to Infinox UK, based at Birchin Court, near Bank and Monument, were dismissed as clients of a ‘separate legal company’.
Anthony Stubbs, a Bahamian businessman claimed to be Infinox Bahamas‘ CEO, blamed Singh for the losses, but clients’ copy-trading contracts said his firm was ultimately responsible for trading decisions.
Jay Mawji, managing director of the British firm, which owns the Infinox brand, denies any affiliation with Singh and in January 2020 insisted ‘Infinox Bahamas’ was a ‘separate’ company which had ‘nothing to do’ with his business.
But victims suspected Mr Mawji had more to answer for, noticing their contracts were emailed to them by his firm and said signing would make them ‘engage with the services offered’ by both companies.
Metro.co.uk has since identified two employees of Infinox UK as admins of several WhatsApp group chats used to update hundreds of GS3 clients.
The pair, who appear to no longer work for the company, repeatedly posted messages suggesting they were in charge of the money, signing one message: ‘best regards, Trading Team.’
Clients were told to monitor their investment through an app showing the value of closed trades, seeing months of steady profits trickling into their accounts.
They were also legally entitled to see the performance of open trades, which would have revealed how the traders began building up losing positions since the summer and only started closing them when they reached £3.9 million on Christmas Eve – emptying everyones accounts.
But log-in details for another app showing these statistics were tucked away in small print at the end of their contracts, and its existence was not mentioned anywhere on Infinoxs website.
The Infinox employees failed to intervene when Singh told the group they were not allowed to see such data and quietly removed members who challenged the policy as ‘confusing’, according to chat logs downloaded from one group chat.
After word of ‘negative trades’ got out four months into the scheme, the pair again stayed silent as Singh insisted they were not a danger to clients‘ funds and would ’go positive‘ once ’Brexit is done with.
Jonathan said: ‘It wasn’t even just that they didn‘t correct him, they were confirming everything he was saying and egging him on.’
A trader claiming to have worked with Infinox in a similar role as Singh said it used the Bahamas company as a front to profit from ultra-risky schemes forbidden under UK regulations.
He said employees of the UK firm pushed all the clients he introduced to unwittingly open accounts on a separate ‘Bahamas server’ so it could profit from the Caribbean tax havens light-handed trading rules.
Bahamian regulations allow traders to use ‘leveraging’ strategies which are more than 16 times riskier than permitted in the UK, dramatically raising the amount of money brokers can make from transaction costs.
The trader, who wished to remain anonymous, said Infinox UK employees told him the scheme was ‘FCA-regulated via the UK company’. But he discovered the UK‘s legal cap on leveraging ’meant Infinox couldn‘t make enough to pay affiliates like myself and Gurvin from accounts managed under FCA rules.’
Had the accounts been managed under FCA rules, Infinox would also have been legally required to close all trades when losses hit 50 per cent.
The trader, who was not authorised to promote financial services, provided emails and screenshots appearing to show agreements with Infinox UK and payments from the firm – and that company executives used both ‘@infinox.com’ and ‘@infinox.bs’ addresses.
Another employee described to Infinox Bahamas clients as their ‘account manager’ told one of them its ‘customer services, sales, finance, and compliance’ departments were all located at Infinoxs UK headquarters, according to an audio recording from another source heard by Metro.co.uk.
Footage of corporate meetings obtained from YouTube and Instagram appears to show him and the pair who helped run Singhs WhatsApp groups in the offices.
Accounts published on Companies House show nearly £1 million of Infinox UK‘s £9 million revenues in the year ending March 2019 came from the ’Caribbean geographical market.
Mr Mawji declined to explain how the money was earned in January 2020 and raised ‘concerns as to the source of [the] information’, claiming it is ‘not available in the public domain’.
His firm‘s latest set of public accounts omitted any breakdown of the geographical spread of its revenues on the grounds that ’income is generated from clients across the world.
In response to persistent complaints from an investor, Infinox UK admitted its CEO, Robert Berkeley, is also a director of Infinox Bahamas.
According to filings obtained from Australia‘s financial regulator, Mr Berkeley is also a director of an entity registered in Sydney which Infinox Bahamas owns and uses to hold client funds in ’segregated accounts.
Other documents held by the body revealed he owns a company registered in St Vincent and the Grenadines whose sole purpose is to hold Infinox Bahamas‘ ’underlying assets.
Infinox.com is now used solely by Infinox Bahamas, with a landing page added in 2020 warning users they will not be protected by European regulations.
Infinox Bahamas denied any involvement in the trading and said any losses were ‘settled in the financial markets’.
Many Forex brokers profit from their clients‘ losses, but some recreate the experience of trading in a ’market by automatically matching their bets with other companies who take the profit instead.
Infinox Bahamas declined to explain how it passed profits onto other companies and did not deny profiting £3.9 million from the schemes collapse.
Infinox UK denied acting fraudulently or breaking FCA rules and claimed its board of directors is ‘independent’ from Infinox Bahamas‘, which has a ’separate governance structure.
It admitted to a historical ‘outsourcing arrangement’ with Infinox Bahamas but insisted the UK authorities were aware of it and that it covered any ‘activities in relation to [the GS3 scheme]’ conducted by UK employees. It did not deny that its employees helped trade the victims money or that the pair had been sacked.
Infinox UK rejected any suggestion Infinox Bahamas is a shell company and said the entity in St Vincent and the Grenadines was a ‘a dormant company which has never held any material assets,’ but did not comment on other entities linking their finances.
The company insisted the ‘account opening process makes it clear which entity clients are dealing with’, pointing to the different suffixes on their websites and references to the FCA or the Securities Commission of the Bahamas at the bottom of each webpage.
It argued the ‘delineation’ between the two companies was ‘supported by a recent finding of the Financial Ombudsman’, which rejected a complaint from a copy-trading investor as they could not be considered a ‘client’ of the UK firm.
The firm claimed: ‘This was true for all [copy-trading] investors, as was made clear in the relevant risk notices contained in on-boarding emails and related client correspondence.’
Metro.co.uk understands the ombudsman did not consider the email referring to ‘services offered by Infinox Capital Ltd’ – which did not include a risk notice – nor any of the interactions between Infinox employees and GS3 clients. The complainant invested in a separate fund promoted by another unauthorised team.
The ombudsman also told the complainant that Infinox UK ‘likely did have some involvement’ with their account and expressed ‘concerns … around what’s happened here‘, according to an email seen by Metro.co.uk – but suggested his hands were tied by the way the FCA defines ’client.
A spokesperson for the Financial Ombudsman Service said: ‘Our role is to look into individual complaints, so any communication with an individual consumer will be on the facts of their specific case and not a broader determination on the ability of other consumers to bring complaints to our service’.
Gurvin Singh denied misleading his clients when contacted by Metro.co.uk in December 2019 but has not responded to subsequent requests for comment.
The FCA declined to comment as it ‘does not discuss individual firms’. The Securities Commission of the Bahamas ignored repeated requests for comment.
Devon and Cornwall Police confirmed an investigation was ongoing in February but have provided no updates since.
Rowet, a trading name of Rowet Group, presents itself as an operationally-focused, principal investment firm that makes controlling and significant minority equity investments in the energy, mining, communication, hospitality, real estate and financial services sectors. The broker is registered in Nigeria, however, it is suspiciously regulated.
FVP Trade has received a securities fraud warning from Quebec, Canada.
Wealthstreet Advisors Private Limited (short for “Wealthstreet”) is an India-based financial management company providing integrated wealth management solutions to individual and institutional clients across India. Besides, an array of financial services including Equities, Mutual Funds, and Fixed Income Instruments, and more, are available with Wealthstreet.
PROFITMART, a trading name of PROFITMART SECURITIES PRIVATE LIMITED, is allegedly a suspicious regulated stock broking house registered in India since 2010 that claims to provide its clients with diverse products and services on the web-based and mobile trading platforms, as well as margin calculators.