In recent years, forex trading has experienced a considerable increase in Nigeria and this increase has brought growth to the economy. Also, this new development has reduced the unemployment rate in Nigeria, as many people now have the opportunity to make money for themselves. However, just as forex can attract legit traders, there is also a likelihood that it will attract scammers who want to steal your hard-earned cash. Hence, as a trader, you must learn about the obvious forex scams in Nigeria and some red flags to look out for when dealing with a forex broker.
Is Forex legal in Nigeria?
In Nigeria, Forex trading is completely legal. However, all brokers must obey all the rules and regulations that the Central Bank of Nigeria has put in place to guide forex trading. Generally, the CBN advises traders to only trade with licensed companies that have a fair work ethic and can take responsibility if there is a breach of agreement. As for taxation, you must register all profits you gain from successful trades. The law requires traders to pay a 10% tax depending on the amount of revenue.
Forex is an extremely liquid market that has an average everyday volume of over 5 trillion dollars. In Nigeria, traders are basically permitted to trade currencies, securities, precious metals, and even raw materials. To make money you need to speculate on the major changes in the rates of assets. To gain profit, you have to monitor the forex market every day and make use of fundamental and technical analyses. However, for all these factors to work for you, you still need to find a good broker, i.e., an experienced middleman in making forex deals.
Top 8 Forex scams in Nigeria
The fast-growing forex market in Nigeria will definitely attract legit brokers and financial scammers. Basically, these scammers disguise themselves as legit companies and rip investors off their hard-earned money. Therefore, the appropriate authorities have blacklisted them and issued a public warning to the public. Here is a list of some of the top forex scams in Nigeria:
1. STForex
STForex is a self-acclaimed forex company that has been functioning in the international forex market since 2014. Essentially, it is an offshore organisation that was registered in Saint Vincent and the Grenadines, a country in the Caribbean. Unfortunately, in this country, there is no regulation for binary and Forex brokers. Hence, the company does not have the necessary licenses to operate.
The scam company, STForex, lured their potential victims with the chance to take a course on trading. Also, they gave false promises to provide precious metals, raw materials, as well as other assets. However, they failed to live up to their promises and ran off with other people’s money instead. The major signs of fraud in this company include:
- Blocking forex accounts for no reason;
- Absence of legal documents that confirms lawful business
- Too many negative comments on numerous web resources
- Fake recommendations from pseudo-analysts;
- Unauthorized opening and unauthorized closure of trades
- Lastly, extortion of investors’ money.
2. LibraMarkets
LibraMarkets claims to offer investors instant access to trading currency pairs, cryptocurrencies, indexes, raw materials, as well as CFDs. Basically, the organization lured novice traders by promising them diversification in their trading experience and favourable trading terms.
However, this broker has caused a lot of harm to traders since its inception in 2018. Based on the reviews online, clients claimed that they were scammed and left with nothing since the forex company isn’t regulated. The major signs of fraud in this company include:
- The broker bars user accounts for no reason and restricts client’s access to profiles
- Money vanishes from accounts
- the company’s employees assign bonuses with enslaving periods of working off
- unresponsive support service. All clients’ complaints went unanswered
- After big losses, the organization offers to deposit more money.
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3. KS-Securities
According to KS-Securities, their brand is managed by the prominent Austrian corporation, KS-Securities Vermögensverwaltung GmbH. Basically, this broker claims that the local Financial Market Authority regulates them and they have authorizations from CONSOB in Italy and the BaFin in Germany. However, all these claims are false. In fact, the organization has been confirmed to be fraudulent. The notable signs of fraud in this company include:
- lies about having a licensed business
- Presence on the blacklist of numerous regulators
- Funds withdrawal is a sham
- Complete control of the platform and its handlers
- Absence of regular client services
- Lastly, exposing comments.
4. RMT500
RMT500 is a company that started rendering services in 2019 and is from the Marshall Islands. On the RMT500 website, there’s no assurance that the broker has all the essential legal documents to execute business. Also, there are no minimum deposit conditions on the platform and this is a red flag. Amateurs traders are promised training programs, a private manager’s help, day-to-day market surveys, as well as an individual bonus program. Unfortunately, these were all lies. The main signs of fraud in this company include:
- Imposing bonuses and the services of a personal manager. This manager acts solely in the interests of the organization
- Profit withdrawal difficulties
- Paid for good reviews on the broker’s website. However, this is not consistent with reality
- Also, the absence of regular client services
- Absence of regulation
- Controlled platform
5. Royaltd24
The offshore company, Royaltd24, built its business on fake promises. The forex broker from the Marshall Islands provides brokerage services without any license. Hence, it has been blacklisted by many regulators, including the Nigerian Central Bank and the Italian CONSOB. Traders who fell victim to this scam were promised amazing leverage of up to 400x, a welcome bonus, and ultra-tight spreads. The platform also claims to provide Islamic accounts. The red flags that indicated it is a scam include:
- Absence of legal authorisation to operate;
- No information about the liquidity providers;
- Also. unreasonable terms of working off bonus rewards;
- Controlled forex trading software, which can manipulate quotations and even nullify users’ deposits in record time;
- Hidden extortion. When any client tries withdrawing money, they request clients to pay for fake insurance, fees, as well as taxes;
- Negative reputation on the web.
6. Atlantika
Atlantika is owned and managed by a company in Estonia named Tradepoint Systems Ltd. Basically, this company promises to operate within the legally approved framework, however, this is a lie the company’s name is not listed on the Estonian financial inspection list. Also, the broker is already part of the blacklist of regulators. The Italian CONSOB in particular, has issued a public warning about the fraud.
The fake broker entices beginners by promising to give them comfortable and very safe trading in currency pairs, stocks, commodities, as well as digital assets on excellent conditions and a developed web platform. Traders also fell for the qualified support trap that was supposed to help increase their capital. However, based on reviews online, this was all a lie. The major signs of fraud on this platform include:
- Absence of any financial business license;
- On the blacklist of the respected forex regulator CONSOB;
- Also, too many negative reviews;
- Secretive policy and facelessness of the project authors;
- Fake proposals that lead to the total loss of deposits;
- No financial responsibility, or guarantee of stable work on the platform.
7. Axiory
Axiory is an organization from Belize that was established in 2014. The minimum access deposit is set at just $10. The broker claims to offer instant access to transactions with stocks, currency pairs, and stocks, as well as contracts for difference. According to statistics from the Traders Union, approximately 2.48% of the clients of this company are Nigerian. The main hints of fraud are:
- False information on the forex broker’s website;
- Trading discipline difficulties (disconnection of servers, slippages, transaction errors);
- Nonpayment of funds;
- Zero client support;
- Unilateral refusal from any cooperation;
- Lastly, negative reviews from past clients.
8. New Forex
This brokerage firm has been delivering forex services since 2014. Also, it serves as a partnership program for learning, reviewing hedging, etc. The brand is owned and managed by Finpark Ltd and attracts beginners with a very low barrier of entry, numerous payment methods, and generous leverage. The company operates in 149 countries, including Nigeria. It got blacklisted due to the non-fulfilment of responsibilities and their money extortion. Their main signs of fraud are:
- Too many negative comments;
- Support difficulties;
- Arranged trading platform mistakes
- Enslaving conditions of working off bonus rewards;
- Groundless denial to allow clients to withdraw profits.
9. Forex CT
Forex CT is an Australian-based brand that began brokering in 2006. The company is supervised by Forex Capital Trading Pty Ltd. Basically, they promised forex traders enticing bonuses, free education, as well as 24/7 support. The trading software of this company uses MT4 and IFP. For some time, the organization was authorised by the ASIC. Currently, Forex CT’s website is down, and the broker has become very fraudulent. The main indicators of fraud are:
- Failure to fulfil responsibilities
- Refusal to pay clients
- Abnormal widening of spreads
- Damaged reputation
- License nullification
- Lastly, trading process manipulations
10. Panteon Finance
Panteon Finance has been well-recognized since 2010. It cites itself as a broker both in Forex trading and investments. The organization is registered in Belize and has a license from the IFSC based on their early reviews. At first, this broker was getting satisfactory reviews, however, things have changed. There have been too many complaints about failure to fulfil obligations and technical problems. The broker has gotten on the blacklist of several independent reviewers. The major signs of fraud include:
- Bad reputation among traders;
- Trading platform errors;
- No payment discipline;
- Non-fulfilment of responsibilities;
- Low rankings on dominant web resources;
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How to Check if a Forex broker is legit in 5 steps
With the rate at which forex scams increase every year, it is important to know the red flags to look out for before choosing a broker. Before registering on any forex platform and entrusting your hard-earned money to them, you must do a background check and analyse the platform. Also, assess all the risk factors so that you will know what you are getting into. Here are some steps that will help you through this process:
1. Check all regulatory information about your prospective broker
First, you should start by checking if your prospective brokerage company has the legal authority to operate in Nigeria or not. Basically, this serves as an assurance that your broker will offer good services and you can hold them accountable if they fail to meet up to their responsibility. Make sure to check that Nigerian authorities license their operations. You should find this on the Nigerian Exchange Limited website.
Usually, brokers that operate legally do not hide their legal documents. In fact, they provide scanned copies of their certificate of incorporation and licenses on their website. Hence, you should start by assessing their website and checking out the number of licenses on it, so that you can verify this information. You can find information about authorizations and licenses in the footer of a broker’s website. Also, you may find it in a separate tab or another section.
2. Assess the broker’s website
Another important step involves the assessment of your prospective broker’s website. Usually, financial organizations that are serious about operating successfully with forex traders will give the following information:
- Project’s roadmap and strategic growth plans
- Legal information and detailed internal documents with clearly stipulated details of cooperation, and fundamental rules
- Risk Disclosure
- A Variety of payment methods alongside specifications of payment methods and fees
- Specifications of trading contracts, specifying the minimum deposit, spreads, etc.;
- Lastly, a good option of channels to reach their customer support (phone support, email address, live chat, pages on social media, etc.)
3. Check the company’s database on the regulatory authority’s website
You can verify the broker’s license on the website of the regulatory authority. Just search for them using their document number or their company name. Basically, this allows you to know whether the company is regulated by any authority or not.
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4. Read recent customer reviews
Go through reviews of real clients. Essentially, this can give you a lot of information about a broker. Basically, if a company has too many negative reviews (clients complain of extortion, manipulation of the trading process, problems with withdrawals, and negligence of obligations), you shouldn’t do dealings with such a broker. To find reviews, just check the Traders Union website. This website is where traders passionately share their personal viewpoints and tell only the truth about financial organizations.
5. Does the broker guarantee profit?
Basically, a broker cannot assure that you will make a profit, as it acts only as a middleman between traders and the Forex market. Brokers are only responsible for providing a stable platform, the quick execution of client orders, quality trading analytical instruments, and good customer support. The following things should not be on any broker’s website:
- Guarantees that you will make a profit;
- Promises of huge profit in just a short time and without any specialized knowledge;
- Stories about special earning algorithms and secret profit schemes.
Final Thoughts
Finally, the alarming increase in forex scams in Nigeria is enough reason for every trader to be on alert. Fortunately, there are a few red flags to look out for if you want to determine the legitimacy of a brokerage company. We have provided a list of some scam brokerage companies above and the steps to take before choosing a forex broker. Use the information to guide you in your future trading decisions.
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