AK Equity & Xapphire Sued for FX Fraud

A US district court in Wisconsin has issued a judgment ordering Kay Yang, a commodity pool operator, and her companies to pay over $24 million in connection with a retail forex fraud scheme that specifically targeted members of the Hmong minority group in the country. The payment includes a restitution payment of $13.6 million and a civil monetary penalty of $10.3 million.

The Commodity Futures Trading Commission (CFTC) announced the court order, highlighting that it was entered last Monday. Additionally, the court ruled that Chao Yang, Kay's husband, must pay $1.4 million in illegal funds he received from the fraudulent scheme.

The CFTC filed a lawsuit against Kay and her companies, AK Equity Group LLC and Xapphire LLC, in April of the previous year. The allegations stated that they unlawfully solicited a minimum of $15.7 million from approximately 67 investors, enticing them to participate in a commodity pool supposedly for forex trading. At the time, the Securities and Exchange Commission (SEC) also brought charges against Kay in relation to the scheme.

According to the CFTC, Yang and her companies engaged in deceptive practices and withheld critical information throughout the scheme, which took place from April 2017 to March 2020. It was also stated that the defendants also misappropriated at least $4.8 million of pool participants' funds and spent that money on Yang's personal expenses, including spending nearly $1.4 million at casinos and on luxury hotels and cars.

This recent court order demonstrates the ongoing efforts of the CFTC to combat fraudulent and unregistered forex firms operating within the country. In late April, the regulatory agency charged 14 retail FX dealers and futures commission merchants for falsely claiming to be registered with the agency. Among the dealers, which purported to be based in the US, UK, and Sweden, were Cross Trade FX, Volfxtrade, TFX Trading, and Bit Trading.

Earlier in February, the CFTC filed a lawsuit against five individuals and three associated companies for their involvement in three interconnected forex trading Ponzi schemes totaling $145 million. The schemes allegedly defrauded over a thousand investors, and the regulator is seeking to recover the investors' funds while pursuing civil penalties against the individuals involved.