CoinDesk Reports:
London Capital Group Limited’s Bahamian registered entity, a retail forex and contracts for difference (CFD) brokerage, has ceased operations, publicly citing inability to continue operations following the bankruptcy of its Swiss parent company, FlowBank.
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A notice on LCG’s offshore entity website states, “LCG Capital Markets Limited maintains funds within the accounts of FlowBank SA.” “The appointment of liquidators between LCG Capital Markets Limited and FlowBank SA 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 the London Capital Group Holdings, which encountered difficulties after delisting from the London Stock Exchange and NEX Exchange in 2018. That year, then-CEO Charles Henri Sabet acquired LCG, separating it from the troubled London Capital Group Holdings, which is now in liquidation.
Entities licensed in the Bahamas under LCG brand offer forex and CFD instruments. Meanwhile, another entity operating LCG in the UK, regulated by the Financial Conduct Authority, altered 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 UK registered sister entity.
Force Majeure
Now, LCG registered in the Bahamas is considering “the existence of emergency or exceptional market conditions, [which may] prevent [it] from performing any or all of our obligations.” The company has decided to enforce this provision under “force majeure events.”
“Force majeure events include the following events: (i) any event or events or circumstances which we reasonably believe would interfere with our ability to maintain orderly markets in one or more of the indices/markets where we normally transact business (including strikes, riots or civil commotions, labor actions, actions and regulations of any governmental or supra-national authority or body),” the notice added.
Chaos ensued after 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 shareholders have deemed the Swiss regulator’s actions as “rights infringement” and intend to pursue “all necessary procedures” to challenge the regulator’s decision.
