Regulatory Warning Against Red-Listed Offshore Broker Zeal Group and ZFX!

FinTelegram included Zeal Group and ZFX in its red compliance list
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On March 11, 2024, the Spanish regulator CNMV issued a warning against the Chinese-controlled offshore broker ZFX, part of the Zeal Group. The broker is operated via regulated legal entities in the UK and the Seychelles. In our initial review, we were able to register with this offshore broker as an EU resident without any problems. We could theoretically have made unlimited pre-KYC deposits via bank transfer and crypto. This resulted in a Red Compliance Rating.

Zeal Group Key data

Trading namesZFX
Zeal Group
Social mediaLinkedIn
Legal entitiesZeal Capital Market (Seychelles) Limited
Zeal Capital Market (UK) Limited
Traze (Pty) Ltd
Zeal Holdings Limited (BVI)
JurisdictionsUnited Kingdom
British Virgin Islands
South Africa
Contact data[email protected]
Leverageup to 1:100 for FCA-regulated broker
up to 1:2000 for FSA-regulated broker
Related individualsYun Chen
Eric Lu (LinkedIn)
Paul John Chenery
RegulatorsFCA for Zeal Capital Market (UK) Limited (Ref No 768451)
FSA Seychelles for Zeal Capital Markets (Seychelles)
with license No. SD027)
Payment optionsBank wire, credit/debit card, e-wallets
Payment processorsDBS Bank for bank wires
BrightCart for credit/debit cards,
Skrill, Neteller
Trustpilotno rating because of fake reviews
Compliance ratingRed Compliance

The ZFX Narrative

ZFX is a Forex and CFD broker founded in 2016. It is part of the Zeal Group, which operates through Zeal Holdings Limited in the British Virgin Islands. In addition to ZFX, the Zeal Group also operates the Traze brand. The Chinese Yun Chen controls the Zeal Group, according to the latest Annual Statements.

Compliance Check

We scrutinize the operations of the Zeal Group, mainly focusing on its ZFX trading platform. Zeal Group runs ZFX via two main entities: one regulated by the Financial Conduct Authority (FCA) in the UK and another offshore entity in Seychelles, licensed as a securities dealer by the FSA Seychelles. Notably, ZFX lacks the requisite licensing or regulatory approvals to offer its financial products in the European Union (EU) and several other jurisdictions, raising concerns about its compliance with international financial regulations.

However, EU residents can easily register and trade with ZFX‘s offshore platform (ZFX.com) without encountering any regulatory disclaimers or IP-based restrictions. This absence of cautionary measures represents a significant compliance shortfall, marking our first point of contention.

Moreover, ZFX entices retail clients in the EU with leverage options as high as 1:2000 for volatile forex and crypto trades, starkly exceeding the EU’s regulatory limits of 1:30 for forex and 1:2 for non-major cryptocurrency pairs. This aggressive offering constitutes our second red flag.

Zeal Group and ZFX with fake reviews on Trustpilot
ZFX fake reviews on Trustpilot

The platform’s lax approach to client onboarding is another critical issue. Retail clients can deposit virtually unlimited funds pre-KYC (Know Your Customer) verification, utilizing bank transfers and cryptocurrencies. ZFX processes bank transfers through DBS Bank in Singapore, further complicating the regulatory landscape. This policy of allowing substantial deposits without immediate KYC compliance is our third red flag.

The final red flag results from Trustpilot’s assessment that Zeal Group and ZFX have been working with fake reviews. Therefore, the ZFX TrustScore is currently not available on Trustpilot.

Compounding these concerns, the Spanish regulatory body CNMV recently issued a warning against ZFX, underscoring the platform’s questionable compliance status and reinforcing our apprehensions.

Given these findings, we categorically assign a red compliance listing to the Zeal Group and its associated brands, including ZFX and Traze. We strongly advise retail customers to exercise caution and steer clear of these entities. Clients engaging with these platforms do not benefit from investor protection schemes or have recourse to financial ombudsman services, significantly increasing their risk exposure.

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