The Shanghai police have made more than 150 arrests from 4 illegal foreign exchange (forex) margin trading groups operating across 12 Chinese provinces and cities.
As reported by the local news agency CCTV.com, the police were investigating the illegal forex market activities for the last couple of months and made the arrests in a concentrated crackdown across Shanghai, Zhejiang, Guangdong, Sichuan, Hunan, and Henan.
Forex margin trading is banned in China, meaning no one can offer such leveraged services to traders. But there is a massive demand for this market among Chinese retail investors, resulting in such illegal operations.
These illegal FX trading operators handled over 1.54 billion yuan (around $219 million), and the police also confiscated over 200 computers and other hardware necessary for running the operations. Over 80,000 traders were involved in these illegal FX trading activities.
The local police revealed that the illegal gangs were operating since July 2015, and the operators were holding several front companies to hide the illegal activities.
Gangs stealing traders money
The investigation found that the four criminal outfits were operating five illegal foreign exchange margin trading platforms. Detailing the operations, the police said that the traders were depositing funds in yuan on these platforms, and operators were using illegal channels, including underground banks, to evade the ban on such services.
The report also detailed that the operators were also involved in embezzlements and used the funds for gambling. These gangs were even not facilitating any real forex trading experience and even manipulating the order books to dupe the traders.
The Chinese authorities were always vigilant for uncovering illegal trading activities like these. As of last June, as many as 127 illegal forex margin trading platforms were uncovered and seized by the police.
Notably, forex margin trading services are highly regulated across the world, and regulators all over are constantly flagging illegal platforms trying to attract customers.