CFTC: Unregistered Pool Operator and its Owner Fined Over $11 Million for 7.1 Million Forex Fraud

On April 26, 2024, the Commodity Futures Trading Commission (CFTC) announced that Judge Linda V. Parker of the U.S. District Court for the Eastern District of Michigan issued an order of default judgment and a permanent injunction against Darren Robinson, a former resident of Miami, Florida, and his firm The QYU Holdings Inc. (QYUHI), a Wyoming corporation with a purported principal place of business in Dallas, Texas. 

The order bans Robinson and QYUHI from trading in any CFTC-regulated markets and registering with the CFTC. It also requires them to pay, jointly and severally, $5,923,515.37 in restitution to defrauded victims and a $5,923,515.37 civil monetary penalty in connection with a fraudulent foreign currency (forex) scheme. 

Additionally, the order finds from approximately January 1, 2017, to September 28, 2023 (the relevant period), QYUHI acted as a commodity pool operator (CPO) without being registered with the CFTC as a CPO as required, and Robinson acted as an associated person (AP) of a CPO without being registered with the CFTC as an AP of a CPO as required. Also, QYUHI failed to comply with CPO regulations. 

The order resolves the CFTC’s complaint filed on September 28, 2023, against Robinson and QYUHI, finding that during the relevant period, Robinson and QYUHI engaged in a multimillion-dollar fraudulent scheme through which Robinson, individually and as the agent of QYUHI, solicited 38 people and accepted $7,196,365.37 to participate in a commodity pool operated by QYUHI to trade in commodity interests, including foreign currency (forex) pairs on a leveraged, margined, or financed basis with participants who are not eligible contract participants (retail forex) and forex futures contracts. 

Instead of trading pool participants’ funds, Robinson and QYUHI misappropriated all of the pool participants’ funds by depositing them directly into QYUHI’s corporate bank account that Robinson controlled, rather than depositing the funds directly into an account in the name of the pool at a futures commission merchant and/or a retail foreign exchange dealer. 

Robinson and QYUHI misappropriated participants’ funds to pay Robinson’s personal expenses, including, but not limited to luxury cruises, airfare, luxury vehicle purchases, real property purchases, credit cards payments, and other daily living expenses. Additionally, Robinson used not less than $1,272,850 of later-in-time participants’ funds to pay earlier-in-time participants purported “profits” and/or “redemptions” in the manner of a Ponzi scheme.

On January 11, in the Eastern District of Michigan, Robinson was charged in a 12-count indictment alleging 11 counts of wire fraud and one count of money laundering, for conduct similar to that alleged in the CFTC’s complaint. Robinson is currently a fugitive from U.S. law enforcement with an active warrant for his arrest that has yet to be executed.