CoinDesk Reports:
London Capital Group Limited’s Bahamian-registered entity, a retail foreign exchange and contract for difference (CFD) broker, has ceased operations and publicly stated its inability to continue operating following the bankruptcy of its Swiss parent company, FlowBank.
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A notice on LCG’s offshore entity website stated: “LCG Capital Markets Limited maintains funds in an account with FlowBank SA.” “Due to significant agreements between LCG Capital Markets Limited and FlowBank SA, the appointment of liquidators currently prevents LCG Capital Markets Limited from conducting business.”
FlowBank’s Bankruptcy Chaos
LCG, owned by FlowBank, was founded by former LCG CEO Charles Henri Sabet. Previously part of London Capital Group Holdings, the company ran into trouble after delisting from the London Stock Exchange and NEX Exchange in 2018. In the same year, CEO Charles Henri Sabet acquired LCG, separating it from the troubled London Capital Group Holdings, which had entered liquidation.
The entity licensed in the Bahamas to operate under the LCG brand provided forex and CFD tools. Meanwhile, another entity operating as LCG in the UK under Financial Conduct Authority regulation changed its business model last year to become an introducing broker for IG, a former competitor.
More than a week before LCG Capital Markets Limited in the Bahamas issued this notice, the FCA imposed restrictions on onboarding new clients and accepting deposits for its sister entity registered in the UK.
Force Majeure
Now, LCG registered in the Bahamas is considering “circumstances of emergency or special market conditions [that may] prevent [it] from fulfilling any or all of our obligations.” The company has decided to enforce this provision under “force majeure events.”
“Force majeure events include events where we reasonably believe impede any action, event, or occurrence that we would normally accept transactions in one or more indices/markets to maintain orderly markets (including strikes, riots or civil commotions, labor actions, acts and regulations of any government or supra-national body or authority),” the notice added.
The turmoil began when Swiss regulators last month revoked FlowBank’s license and declared the company bankrupt. LCG registered in the Bahamas is currently in contact with FlowBank’s bankruptcy liquidators.
Meanwhile, FlowBank’s major shareholder has called the Swiss regulator’s actions a “violation of rights” and intends to take “all necessary steps” to challenge the regulator’s decision.