Investors take Forex platform ROFX and its founders to court

ROFX stands for “robotically operated foreign exchange.” The company presented itself as a forex automated system, and ran its scheme for nearly four years – from January 2018 until September 2021. The platform used various algorithms to perform trades. Like every other forex robot, transactions were carried out automatically.

The system performed trades on people’s behalf, and ROFX in return gave people shares in the company. Now, you may be thinking, “how is that different from other trading robots?” Well, the issue was that ROFX paid out very little to investors, and didn’t allow withdrawals.

This made their account funds appear larger than they actually were, and created the illusion of stability. The company collected over $58 million from its customers, and then quietly diverted those funds to non-corporate entities in other countries such as Thailand and Poland, as well as the administrators’ own accounts.

On September 29th, 2021, victims of the ROFX scam finally filed a complaint in Florida’s South District Court. They accused ROFX of collecting investments under fraudulent pretenses.

ROFX claimed investors would get daily profits in percentage, but little did investors know, ROFX gave them very little or nothing. The scam was on a global scale, with victims in multiple countries demanding compensation. They wanted the court to apply Federal Rule 23, and they also made a complaint of violations of federal RICO statutes.

The Racketeer Influenced Corrupt Organizations (RICO) Act of 1970 was established to prevent organized crimes in the US. The claimants demanded that the court freeze all ROFX assets and enforce a spoliation order to ensure no important documents were destroyed or went “missing” during the litigation process.

What’s the twist in the story?

Here’s a twist! One of the entities in this story was Notus LLC, a Colorado-based foreign LLC. ROFX deposited funds in Notus, which was led by Borys Konovalenko, a Ukrainian citizen. Borys was a signatory and co-signatory on several American accounts, into which he deposited money fraudulently obtained from ROFX customers’ investments.

Subpoenas revealed this information from various banks and cryptocurrency exchanges via KYC and transaction data. Bank of America and Deutsche Bank responded by providing transaction information. In addition, Bitstamp also jumped in. I will give you a quick summary of the documents each company provided:

From 2019, three accounts sent $561,640 through various transactions, and Borys was the user name for these accounts.. No surprises there! The accounts were in two different locations, with one in Ukraine and the other in Slovenia. BOA acted as a middleman for transactions between the banks. Later, the accounts sent $59,436 through 12 transactions.

They held these accounts in Ukraine, and DB served as a middleman. The total was a whopping $621,076 in illegally obtained funds. There’s more – Borys provided Bitstamp with a contract between himself and Notus, which suggested that Borys was an e-commerce consultant. He did this because Bitstamp requires KYC when you register with them as a business.

The agreement came into effect in January of 2019, with the ending date being January of 2022. In return for his consulting services, Notus would get a fee upon completion of the contract… in the amount of $372,300.

ROFX stands for “robotically operating the foreign exchange.” This in itself should raise some eyebrows. There are two types of systems that fall in this category; signal selling and robot trading.

With robot trading, a scammer touts its forex trading system, creating hype around it with advertisements like “earn money while sleeping” or “Become profitable today with our tested system.”

Firstly, this process is fully automated. No one is sure if the system has a backtest record, or if it’s been verified. Secondly, when the system isn’t verified, it produces random signals. This is not trading; it’s a gamble.

That is how scammers like ROFX take the money of the investors, and in return, give them nothing. Another red flag for ROFX was how user accounts were managed. ROFX claimed that all users had to do was deposit funds on their website, then sit back and let their daily profits come in.

However, you should know that brokerage firms are market-makers; they make money when you lose trades. Scam platforms like ROFX will do anything to make users lose.

Another alarming factor was ROFX’s regulations. The site mentioned that ROFX had US, UK, and Canada regulations. However, there was no mention of license numbers on the website. ROFX also advertised they had licensed from the British Columbia Securities Commission (BCSC), which is the regulatory body of Canada. However, if you check the BCSC website, ROFX is not listed as being licensed.

Risk-free investment

Investing is a risky trade. If someone is claiming risk-free opportunities, you should stay away.

High returns

Often, scammers promise high returns – such as claims of 100% or 200% monthly returns. As we know, forex is not a get-rich-quick-scheme. Here’s a quick fact: Warren Buffet makes between 20 and 50% in annual returns. So, high offers should concern you.

Time pressure

If a firm asks you to invest ASAP, then it’s a scam all the way. These firms offer discounts or bonuses to lure you. You get attracted, and feel pressured to immediately sign up. A regulated firm doesn’t make you feel rushed. They know investing isn’t an overnight thing.

Catchy ads

Many scamming platforms use catchy ads to lure you in. They may have sleek videos to trick people, and promises that sound too good to be true. No real broker or a platform would make unrealistic claims or advertise like this.

Lack of Licensure

Lastly, and most importantly, don’t trust licensure statements on the platform’s website at face value; do some research of your own and make sure that the platform is actually registered with the bodies it claims to adhere to, and that it follows those regulations.

1. Why was ROFX taken to the court?

ROFX scammed investors through their automated forex system, and they didn’t pay investors.

2. What was the role of Notus LLC? 

Notus LLC provided a deposit gateway for ROFX.

3. What was the role of BOA and Deutsche Bank?

Both banks acted as a middleman in transactions between ROFX and Notus LLC.

4. How can you identify scams like ROFX?

You can identify similar scams by doing proper research and taking the above mentioned steps.

5. Are forex automated systems all scams?

No, legit automated forex systems have a proven track record and don’t rob people.

Bottom line

So, now you know how ROFX created its scheme. We’ll keep you updated on the facts of the case as they emerge. Remember to look for the points I mentioned on how you can avoid such scams. Not every auto trader or forex signal provider is a scam, but you just need to separate the bad apples from the fresh ones.