Beware! Legal CFD is an offshore broker! Your investment may be at risk.
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Legal CFD is a Forex brokerage based in EU member-state Bulgaria. According to the brokerage clients there is a required minimum deposit of $250 which is about the industry average and a wide range of trading products available for clients.
Legal CFD regulation & safety of funds
On the brokerage’s website we read that the company behind the brokerage is registered in Bulgaria with the name FTM Consulting EOOD. Bulgaria is a member-state of the EU and the ESMA guidelines are in full force for brokerages operating on the territory of the country.
Furthermore, brokerages in Bulgaria have to be licensed by the local Financial Supervision Commission. However, going through the website and brokerage’s terms and conditions we find no mention of a license. After checking with the online registry of the regulatory agency – we can safely conclude that Legal CFD does not fall under any regulatory oversight. Another troubling aspect of the brokerage is the fact we do not have access through a demo account to the purported trading platform. We view this as a serious problem because traders cannot get acquainted with the trading conditions of Legal CFD.
Such irregularities are the usual “tell” of a scammer. With no regulatory oversight we can’t be certain about the company behind the operation and whether it will fulfill its obligation towards clients. Furthermore, the lack of a demo account for the trading platform, as well any sort of more detailed information regarding the trading conditions of the brokerage highly inclines us to question the legitimacy of the Bulgarian brokerage.
We did find a list of all the Crypto CFDs the brokerage presumably offers – they include Cardano, Ark, Bitcoin Cash, Binance Coin , Bancor, Bitcoin, Dash, EOS, Ethereum Classic, Ethereum and many others. The selection is quite impressive, however, without a test-drive of the platform we cannot be sure whether the brokerage does in fact offer such a wide array of financial instruments.
We urge traders to exclude such risk in trading by only associating with brokers regulated by prestigious regulatory agencies, such as the FCA and CySec, which require compliance with a number of strict rules that give significant assurance for the security of the clients funds.
The segregation of accounts is among the rules which are especially important in the trading world, because it drastically lowers the risk of possible commingling.
Another is the participation in a compensatory scheme by which the client’s losses will be covered in the unlikely case the broker goes bankrupt or attempts to swindle traders.
Legal CFD deposit/withdrawal methods and fees
We find no information regarding the payment methods available on the website of the brokerage. Such a lack of clarity is quite common for unregulated brokerage in Forex trading. However, we did find quite a few troubling provisions in the terms and conditions of the brokerage. First of, and perhaps most troubling, Legal CFD openly states that they offer clients so-called MAM accounts that are automatically controlled by the brokerage and clients cannot withdraw from them for the first six months. This is quite a provision and a certain red flag for the brokerage.
Furthermore, we find a minimum withdrawal amount of $100. Such a provision should not figure among the terms and conditions of a legitimate brokerage.
Legal CFD does not explicitly state it charges any withdrawal fees but, nonetheless, we did find the following in the terms as well. It reads “LegalCFD reserves the right to charge clients for incidental banking-related fees.”
That is why we advise traders to always put up only the required minimum deposit, instead of risking a bigger amount with no certainty. Afterwards, they may also try to withdraw a small amount in order to check for any unexpected fees or delays. Such fees and delays are usually the signs of a scammer.
How does the scam work?
Information is a pretty solid criteria for judging a brokers legitimacy. Scammers would not share much of their information, because precisely there inconsistencies and irregularities may appear which expose the whole set-up. A good example is this very broker and the misleading information it gave regarding its regulatory status.
After informing themselves for the brokers trading conditions – traders should be well-versed in the way of the scam:
Through clicking an ad with promises for fast money, you will be redirected to a website such as Bitcoin Evolution or Crypto Revolt where registration will require you to give your email and phone number. After sharing your personal information, you will being receiving calls from brokers, compelling you to invest with them and win big. After a few minutes hearing their pitches, you decide to deposit some $200-250. And just like that – the scammers take a fat commission from this initial deposit.
After they are done with you, senior scammers begin working you into putting even more money. They say it’s the only way to profit from trading even more. After making the mistake of investing even further, you’ll begin wanting to get out of this and withdraw what you have left.
Unfortunately, the con-artists have no such thing in mind. They will now begin persuading you to wait it out and not withdraw right now. The motive here is quite straightforward – traders have a limited time window for filing a chargeback with their bank and get their money back. The “recovery department” will simply want to mislead you into missing this crucial period and, along the way, losing any chance you might have of getting the money back.
What to do when scammed?
As was mentioned above, scamming is quite the common in the trading world and, sadly, even you might suffer from it. In such an unfortunate case there still may be some available options for you.
You may contact your bank or credit card provider and file a chargeback. Furthermore, due to the high instances of fraud – both Visa and MasterCard have decided to sidestep scammers as best they can in forex trading. The first thing we have seen so far is that MasterCard has increased the previous time period of six months for filing a chargeback to a year and a half with their peer Visa expected to follow suit in December.
If, however, you have provided the broker with your credit card details, immediately cancel your credit card.
If you have given information regarding your online banking pass – you should switch it asap!
Beware of potential calls from self-described “recovery agencies”! They prey on scammed and vulnerable traders who are desperate to recover their losses. They will require an “up-front” payment to help you, but after paying them, no such help will be coming your way!