Customer Complaint Dated July 14th 2020

After a comprehensive analysis of the documentary evidence provided by the Client and the Broker the Dispute Resolution Committee of the Financial Commission has come to the following conclusions:

1. First of all, it should be noted that according to the information provided by the Broker, the values of quotations for the financial asset Bitcoin, as well as for other cryptocurrencies, are calculated according to generally accepted methods used on the Chicago Mercantile Exchange. The Broker uses data from several major online exchanges such as GDAX, Kraken, Poloniex, Bitstamp, Bitfinex and Binance. Thus, the quotes for the Bitcoin asset, broadcast by the Broker in their trading platform, react to the slightest market changes. This information is published on the Broker’s website.

2. According to the Broker, in the period from June 6 to July 1, 2020, the Client has used unfair and dishonest methods or ways of making trades (transactions) with the Company. By the foregoing Broker means the following definition of Market Abuse, adopted in the EU countries:

Market abuse by its definition is a type of behaviour when one/several market participants are involved in trading activity that gives them an unreasonable advantage. Under the EU zone definition, market abuse consists of two aspects: insider trading and market manipulation. The latter represents itself as a trading activity aimed to encourage false or misleading impressions.

3.To justify their position, according to which the Client took actions aimed at manipulating the rate of the financial instrument Bitcoin outside the Broker’s platform, due to which he immediately received a risk-free profit on the Broker’s platform, the Broker uses analytical information obtained on the Binance Exchange trading platform. According to the Broker, being the world’s largest crypto exchange with the largest volumes of crypto transactions, transactions conducted on the Binance Exchange have the greatest impact on the quotes of crypto assets on any other sites around the world and, in particular, on the quotes of such assets, broadcast in the Broker’s platform.

4. The Resolution Committee checked to what extent the Broker’s statements regarding the fact of manipulation of the price of the specified asset for profit by the Client correspond to reality. For this purpose, the Committee examined the documentary evidence and the analytical information provided by the Broker. Based on the results of the audit, the Committee came to the following conclusions:

a) Analytical information on the number of transactions and the corresponding trading volumes on the Binance exchange during the period of the incident indicates that during the specified period, the Bitcoin market did indeed experience both an increase in the total number of transactions and a relative increase in trading volume, which might have led to a short-term change in the rate of the specified asset.

b) Information from the Order Book of client orders registered on the Binance platform during the incident, referred to by the Broker, demonstrates, in the Broker’s opinion, a lack of liquidity: 

• 31163 USD was enough to achieve a yield of -0.01% during the lifespan of transaction # 1319057826.
• 6828 USD was enough to achieve a yield of 0.02% during the lifespan of transaction # 1324114443.
• 99096 USD was enough to achieve a yield of 0.02% during the lifespan of transaction # 1328236807.

с) Judging by the history of the Client’s trading operations, during the period of the incident, the Client made three short-term transactions ## 1319057826, 1324114443, 1328236807 with the financial asset Bitcoin, as a result, taking advantage of the drop/rise in the Bitcoin asset rate by

-0.01%/0.02%, the Client received a total profit of 10940 USD.

d) At the time of blocking, the status of the Client’s trading account was as follows:

• Initial deposit 4015.01 USD,
• Withdrawal of funds 0 USD,
• Bonus funds 4005.01 USD,
• Account balances 19028.46 USD (4015.01 + 4005.01 + 11008.44).

5. The Committee could not provide an adequate assessment of the Client’s trading transactions, since the Broker did not provide any documentary evidence confirming the fact that this particular Client took targeted actions to change the price of the specified financial instrument on the Binance platform or somewhere else.

6. Finally, it should also be noted that several members of the Committee recognized the Broker’s arguments as insignificant since they believe that if the Broker gives the opportunity to trade options on low liquid crypto assets, then they should understand that such assets may well make significant price movements with an amplitude of up to 10 -20% per day. If the Broker wishes to reduce the risk, then they must have a well-established risk management process in place. In the absence of it, the Broker should stop offering trading in what they consider to be illiquid assets in order to prevent their clients from exploiting the vulnerability of their infrastructure in the future.

Based on the above information, the members of the Resolution Committee came to a unanimous opinion that the Broker does not have sufficient grounds to assert that the Client’s actions on the trading platform in any way violate the provisions of the Broker’s regulatory documents. The members of the Committee believe that the Broker should recognize the financial results of the disputed transactions ## 1319057826, 1324114443, 1328236807 of the Client as legitimate and unblock his trading account.

Summarizing all the above the Dispute Resolution Committee does not see any violations on the part of the Client and believes that the Broker must fully satisfy the Client’s requirements to unblock the trading account # 63226192, with the right to withdraw the initial deposit and the accrued profit in the amount of 15023.45 USD.

This complaint was reviewed by the members of the Dispute Resolution Committee of the Financial Commission and was processed by the Head of the Committee.  

Head of DRC