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CFTC Secures $2.4 Million Judgment Against ForexnPower for Forex Fraud: What Traders Must Know
CFTC Cracks Down on ForexnPower: A $2.4 Million Forex Fraud Case
The Commodity Futures Trading Commission (CFTC) has secured a major judgment against two New York-based companies involved in forex fraud. Safety Capital Management Inc. and GNS Capital Inc., both operating under the name ForexnPower, have been ordered to pay over $2.4 million in restitution and penalties. This case serves as a stark reminder that forex scams continue to target vulnerable communities, and traders must remain vigilant when choosing a broker or investment advisor.
The ForexnPower Forex Fraud Scheme: How It Worked
According to the CFTC’s findings, the ForexnPower fraud operation was based in Queens, New York, and specifically targeted Korean-language speakers in the local community. The court found that the defendants “deliberately exploited their access to a vulnerable community” who were “totally reliant on defendants to protect and manage their investments.”
The scheme involved multiple violations of the Commodity Exchange Act, including:
- Retail forex fraud – Misleading investors about the nature and risks of forex trading
- Fraud as commodity pool operators – Illegally pooling investor funds without proper safeguards
- Fraud as commodity trading advisors – Providing fraudulent trading advice to extract money from victims
- Related regulatory violations – Operating without proper registration and compliance
The Penalties: $2.4 Million in Restitution and Fines
The U.S. District Court for the Eastern District of New York imposed severe penalties on the companies and their operators:
- $835,058 in restitution – To be paid jointly and severally by Safety Capital Management, GNS Capital, John H. Won, and Tae Hung Kang (aka Kevin Kang)
- $1,441,143 civil monetary penalty against Safety Capital Management (triple the monetary gain)
- $186,102 civil monetary penalty against GNS Capital
- Permanent injunction barring the companies from further violations
Criminal Convictions: Beyond Civil Penalties
This case went beyond civil enforcement. In a parallel criminal case, the key individuals behind ForexnPower faced serious criminal charges:
- Tae Hung Kang (Kevin Kang) pleaded guilty to securities fraud conspiracy
- John H. Won was found guilty by a jury of securities fraud and conspiracies to commit wire fraud, securities fraud, and money laundering
These criminal convictions underscore the severity of the fraud and send a clear message that forex scam operators will face both civil and criminal consequences.
How to Protect Yourself from Forex Scams Like ForexnPower
The ForexnPower case highlights several red flags that every forex trader should watch for. Here are key steps to protect your investments:
1. Verify Broker Registration
Always check whether your forex broker or trading advisor is registered with the CFTC and is a member of the National Futures Association (NFA). You can verify registration at ScamBrokersReview.com or directly through the NFA’s BASIC database.
2. Be Wary of Language-Specific Targeting
Scammers often target specific ethnic or linguistic communities where trust is high and regulatory awareness may be lower. If a forex service is marketed exclusively to a tight-knit community, exercise extra caution.
3. Never Give Full Control of Your Funds
Legitimate forex brokers allow you to maintain control of your own trading account. If someone asks you to hand over your money for them to trade on your behalf without proper regulatory oversight, it is likely a scam.
4. Watch for Guaranteed Returns
No legitimate forex trader or advisor can guarantee profits. The forex market is inherently risky, and anyone promising guaranteed returns is likely running a fraud scheme.
5. Check for Past Enforcement Actions
Before investing with any forex company, search for past CFTC enforcement actions and check reviews on sites like ScamBrokersReview.com.
The CFTC’s Warning to Investors
The CFTC cautioned that “restitution orders may not result in victims recovering any money lost because defendants may not have sufficient funds or assets.” This is a sobering reality — even when regulators catch forex scammers, victims may never recover their losses. Prevention is always better than cure when it comes to forex fraud.
Frequently Asked Questions (FAQ)
What is ForexnPower and why was it shut down?
ForexnPower was the trading name used by Safety Capital Management Inc. and GNS Capital Inc., two New York companies that ran a forex fraud scheme targeting Korean-language speakers in Queens. The CFTC secured a $2.4 million judgment against them for retail forex fraud and related violations.
How can I check if a forex broker is legitimate?
You can verify a forex broker’s registration through the CFTC, NFA’s BASIC database, or by checking reviews on ScamBrokersReview.com. Legitimate brokers will be properly registered and regulated.
What are the warning signs of a forex scam?
Key warning signs include guaranteed profit promises, unregistered brokers, pressure to invest quickly, requests to hand over full control of your funds, and targeting of specific ethnic or linguistic communities.
Can victims of forex fraud recover their money?
While regulators like the CFTC can order restitution, recovery is not guaranteed. The CFTC warns that defendants may not have sufficient funds to pay back victims. This is why prevention and due diligence are critical.
What penalties do forex scammers face?
Forex scammers can face civil penalties including restitution orders, monetary fines (often triple the ill-gotten gains), and permanent injunctions. In serious cases, they also face criminal charges including securities fraud, wire fraud, and money laundering conspiracy.