In an interesting development regarding the popular broker IronFX, it appears that their dissatisfied Chinese clients and IBs who have been complaining about withdrawal problems in the past few months, have taken the battle to the next level by filing a case against the firm before the District Court in Limassol, the Cypriot town which is the home of IronFX.
According to sources, the case was filed in late January and it contains complaints from about 160 Chinese Clients and IBs, who accuse IronFX of denying withdrawal requests and thus withholding client funds which amount to almost $1.25 million.
As this dispute has been going on for some time, the official response from the broker in defending itself was and still is that these particular Chinese traders who are complaining are in fact abusive traders, who have somehow managed to manipulate the terms of the broker’s bonus offerings and thus their claims are unsubstantiated. The firm also denies any wrong doing in regards to their IB in China, saying it does nothing different in this market than what its competitors do.
However, in an added twist to the ongoing saga, it seems that complaints are not confined to IronFX’s Chinese clientele, as non-Chinese traders are also complaining in forums that they are experiencing withdrawal difficulties. More specifically, they report to have received a message from IronFX that their account has been put under investigation “for potential irregular trading activities.”
Although not directly admitting this is a widespread problem, IronFX has sort of hinted that they have in fact put limitations on all promotions-related withdrawals, while they investigate how and why these where manipulated by abusive trading strategies. Nonetheless, the broker’s main line of defense is that is has somehow become the target of malicious rumors fuelled by their competitors and certain media outlets, exactly because of their rapid growth and rise into a dominant position in the market in such a short time.
We do not entirely bite into such “conspiracy theories”, however, we cannot overlook the fact that IronFX has achieved a remarkable market growth and its success story must have of course stepped on some toes… In fact, if one looks at the stories for which IronFX has hit the headlines over the past year, those that stand out are its rumored US based IPO, its multimillion sponsorship deal with the acclaimed Barcelona FC, its extravagantly lavish promotional competitions, such the one sending the winning trader on a trip to space (?!!!) and more recently that did not only manage to escape the Swiss franc debacle untarnished but that it was also interested in taking over Alpari UK, that was hard hit by the Swiss franc story. All these then may offer some justification and validity to IronFX’s claim that their competitors are unhappy with their successes and are out to get them.
That being said, and to the interest of our trader readers, especially those holding accounts with IronFX and who are worried if their funds are in danger, let us venture an educated guess as to where the truth really lies in this matter. We find it hard to believe that a broker that has achieved so much in the five years of its presence in the market would suddenly decide to jeopardize its reputation by actively engaging in foul play and by purposely “deceiving” its clients.
However, true to the saying that there is never smoke without fire, it appears that IronFX is going through a somewhat rough patch. This is further supported by the fact that one of its regulators, the Cyprus Securities and Exchange Commission is reported to be currently investigating an official complaint filed against the broke in early January. We still don’t know that the outcome of this investigation will be, but IronFX has also boasted of the fact that it has never to date received any warning or fine from any of the eight regulators it reports to, namely CySEC, FCA, ASIC, DFSA, FSB, FSP, CRFIN and UCRFIN. This might be also true, but it doesn’t mean that they haven’t settled any complaints outside the regulatory framework.
In a nutshell, and if we take into account all the information so far, we can’t say that IronFX has suddenly turned from reputable to crooks. Most probably what happened is that the broker has fallen victim of its own rigorous and aggressive bonus programmes, which as a market-making broker, it has heavily relied on in order to attract more customers. These seem to have somehow back-fired since IronFX were “outsmarted” by certain clients who managed to abuse the offers and were able to bend the requirements for achieving bonuses.
IronFX sees this as a breach of its trading rules and conditions and it may be right in doing so. However, putting the accounts of many traders under investigation for a prolonged period is not the right way to go, since it enhances confusion and concerns and gives room for further rumors to emerge. If it wants to protect its reputation and maintain its market leader status, then IronFX should address any issues decisively, swiftly and transparently.
We will continue monitoring the story and bring you up to date as events unfold. As always please share with us and the other traders out there any relevant personal experiences or opinions you may have.