FinTelegram Maintains Orange Compliance Listing For Offshore Broker BDSwiss!

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German entrepreneur Jan Malkus has been identified as the beneficial owner behind the controversial broker scheme BDSwiss, a group that has faced significant regulatory challenges in various jurisdictions over the last three years. Therefore, the CySEC-regulated BDSwiss became an offshore broker supervised by offshore regulators. The successor CySEC scheme, Viverno, does not seem to be successful. We maintained the Orange Compliance listing.

Regulatory Challenges and Sanctions

BDSwiss, once regulated in Europe by the Cyprus Securities and Exchange Commission (CySEC), encountered regulatory difficulties due to its aggressive marketing strategies and reliance on offshore structures. The UK Financial Conduct Authority (FCA) imposed a ban on BDSwiss, and CySEC also levied fines against the broker.

In May 2021, the FCA banned BDSwiss and its related entities from offering high-risk contracts for differences (CFDs) to UK investors. The FCA’s decision highlighted the misuse of a UK-regulated entity within the BDSwiss Group to lend an appearance of legitimacy despite the majority of UK consumers dealing with the group’s unregulated offshore activities.

CySEC settled with BDSwiss in 2017, imposing a fine of €150,000 for suspected business conduct violations and an additional €5,000 administrative penalty. In March 2022, the German Federal Financial Supervisory Authority (BaFin) stated that BDS Markets, an offshore entity of BDSwiss in Mauritius, was unauthorized to offer its regulated services in Germany.

FinTelegram Reports and BDSwiss’s Response

Following reports by FinTelegram on the group’s offshore activities and regulatory breaches, BDSwiss temporarily halted the onboarding of new clients in 2022, possibly in response to CySEC’s reactions to these reports. In June 2023, CySEC fined BDSwiss €100,000 for misleading clients into believing they were dealing with a CySEC-regulated firm.

The Offshore Transformaion

Amid increasing regulatory scrutiny, BDSwiss withdrew from the EU and CySEC’s oversight. The group is now regulated by the Financial Services Authority (FSA) Seychelles and the Financial Services Commission (FSC) in Mauritius.

In 2023, the CySEC-regulated investment firm (CIF) BDSwiss Holding Ltd rebranded as Viverno Markets Ltd and launched a new CySEC-regulated broker scheme under the brand Viverno. Despite the rebranding, BDSwiss, now based in Seychelles, continues to utilize its office in Nicosia and the CySEC-regulated Viverno Markets Ltd as a payment processor. This suggests that management and control of BDSwiss may still be conducted via Cyprus.

Recent traffic analysis indicates a decline in visitors to the BDSwiss website, with many still coming from EEA jurisdictions and Canada despite the lack of regulatory approval in these regions. Conversely, the newly regulated broker Viverno sees significantly less web traffic, suggesting its primary function may be as a payment agent for BDSwiss.

Malkus’ Duronga Holdings Ltd shares its registered address in Nicosia with other notable entities, including other brokerages and financial service providers. Among these are Dilea Secretarial Limited, and SileniTrading Limited, which have faced sanctions due to connections to Russia.

Compliance Check

Considering the regulatory issues, opaque corporate structures, and negative investor feedback, FinTelegram maintains its Orange Compliance listing of BDSwiss. The complex history of regulatory actions against BDSwiss, its offshore activities, and the recent rebranding and relocation efforts paint a picture of a group attempting to navigate and possibly circumvent regulatory landscapes. This situation warrants close monitoring and a cautious approach from potential investors and market participants.

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