Is Tradorax a Scam Forex and Binary Options Broker? Complaints are Rising

We have been receiving a rash of complaints regarding the Tradorax brokerage firm. It is a relatively new broker, entering the binary options scene in 2014 and offering Spot Forex to round out its offering. We conducted a review of the broker in June of 2014, and many of the comments that we made back then have been echoed in other reviews from other websites on the Internet. Over the recent two-year period, there have been a few complaints made against Tradorax on various complaint sites but there is not a broker alive that has not offended clients from time to time.

We at ForexFraud.com, however, have received numerous complaints in 2016 regarding Tradorax, causing us and others to wonder if this firm is still legit or if it is a scam to be avoided. In order to make that determination, one has to ask first has anything changed in the past two years to warrant an investigation? When Tradorax was originally founded, it was the “trading name of Alagos Limited located at Secretary’s lane 5 Gibraltar, company registration number of 110881.”

When we checked back with the current website, it read, “tradorax is owned and operated by AM Capital Ltd, Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960. Billing and Clearing services are provided by Alpha Capital House Ltd of Suite O0038, 35 Victoria Road, Darlington, Durham DL1 5SF, UK.” Paying agents usually have little to do with the operating nature of the firm, but it this case, there is now a “casual” relationship with a prestigious London address, always a good marketing point for a firm operating in the financial services industry.

What can we deduce from this change in ownership and location?

If we can follow an historical audit trail of sorts, then we might be able to understand how the firm’s current status came into being over time. Alagos Limited was the original owner, operating out of Gibraltar. Its registration is still valid, but there have been no filings since mid-2014. A review of a general public registration database reveals that:

“The corporation Alagos Limited is a company whose main activity is in Gibraltar. The business company has been accessed recently thirty four times in the last two years and eight times in the last three months from twelve different countries.”

Why would there suddenly be recent activity? Could other investigations be underway? After we checked in with the local regulatory body in Gibraltar, the Financial Services Commission (FSC), we found that the agency had issued a warning bulletin sometime back, including Alagos Limited along with six other operating entities. The nature of the warning was as follows:

“The FSC has received information about websites operated in the name of these companies, for which the company secretary has resigned and also filed a ‘Notice that the company does not have authority to use the address it has registered’ at Companies House. References are made on these websites to the companies’ former registered office addresses in Gibraltar, as if this was where the websites were operating from.

The FSC has received complaints from customers, where they describe having been unable to withdraw funds placed into trading accounts operated by these websites or otherwise experienced difficulties when attempting to obtain monies owed to them. None of these companies are or were regulated by the FSC, nor licensed under the Financial Services (Markets in Financial Instruments) Act 2006, to carry on investment business in or from within Gibraltar.

Customers of these websites, or of companies currently providing online platforms for binary options trading are not covered by the Gibraltar Investor Compensation Scheme.

The FSC therefore urges the public to avoid engaging with these companies, as they have no place of business in Gibraltar and for which it has been unable to establish their true location.”

We can only surmise that Tradorax and its owner, Alagos Limited, ran afoul of the local regulator and was either sold to another entity or re-incorporated in another jurisdiction.

What can we determine about the new owner, AM Capital Ltd?

A routine search of the Internet produces an investment boutique firm operating out of Hong Kong with the same name. It does not appear to have any association with the AM Capital Ltd company registered in the Marshall Islands. The Marshall Islands’ address is also a common address given for a host of companies with a registration agent in the Republic of the Marshall Islands (RMI). The address does not imply that the firm has a physical presence on the island, only that it chose to have its papers of incorporation filed with the RMI.

The Republic of the Marshall Islands, located in the Pacific midway between Hawaii and Australia, is an independent nation with roughly 60,000 people that also has a special relationship with the United States government. The economy revolves around the U.S. military base and the aid that flows from the nation’s compact with the U.S. It, like many other island nations, has tried to attract financial services companies to its shores for registration and revenue purposes. In other words, it is a likely tax haven and method used by wily firms to disguise their actual whereabouts.

What information does Tradorax provide under its “Contact Us” website page?

If a new firm wishes to gain your trust and avoid any suspicions that might be raised during due diligence, then they typically reveal actual street addresses and actual locations and filing numbers for authorized licenses. It is also helpful to enter these addresses in a search engine to validate them or to see if something else comes up. On the “Contact Us” page for Tradorax, there is a convenient map of a section of London, with no “We are here” marker to establish their actual physical street address. The viewer is left to jump to his own incorrect assumptions.

There are also a number of general type email addresses provided, as well as access to a “Live Chat” application. There is no indication as to where or what legal jurisdiction applies to operating activities performed. One annoying feature that we encountered was an automatic pop-up tab that appeared in the lower left corner of the screen that read, “We’re not around, but we’d love to chat another time.” You are asked to enter your contact information, and they will get back with you, perhaps, by an aggressive salesman that demands large deposits in order to teach you how to make millions in a short period of time.

Do these facts suggest that Tradorax just might be a scam? Many firms follow these same tactics in order to avoid having to deal directly with irate customers that have lost their bankrolls while pursuing binary options. For the untrained newcomer, trading in binary options is nothing more than gambling where the odds are firmly tilted toward the House. If Tradorax wanted to appear legitimate, they could have easily rectified these shortcomings, but, for the record, the nature of their origin and subsequent re-launch from a new locale does not make them a scam, per se. It does, however, raise doubts and suspicions.

What is the nature of the recent complaints about Tradorax?

Regulatory agencies are not fond of the binary options industry. Their complaint logs have ballooned, and consumer alerts have filled the Internet airways for the past few years. Here is just one warning shot:

“The CFTC and SEC have received numerous complaints of fraud associated with websites that offer an opportunity to buy or trade binary options through Internet-based trading platforms. The complaints fall into at least three categories: refusal to credit customer accounts or reimburse funds to customers; identity theft; and manipulation of software to generate losing trades. In addition to ongoing fraudulent activity, many binary options trading platforms may be operating in violation of other applicable laws and regulations, including certain registration and regulatory requirements of the CFTC and SEC.”

We highlighted the three prevalent reasons, because they mirror our experience at ForexFraud.com and at other websites that post complaints from the public at large. In addition to these three reasons, questionable firms typically will solicit customers in a jurisdiction where they have no license or authorization. Tradorax purports to accept U.S. customers, but they are not listed in the FINRA “BrokerCheck” database of licensed brokers. The fact that they are not listed does not mean they are automatically a scam, but they need to apply to continue to appear legitimate.

As for general complaints, aggressive sales tactics and a refusal to refund a deposit or honor a withdrawal request are the big ones. If you follow the complaint threads on various sites, the tales are ones of woe that the client is being deliberately harassed or blocked from getting access to his account or his funds. Requests for withdrawal are continually dropped or ignored.

Tradorax staff members are not totally unresponsive. There are instances where Customer Service reps for Tradorax have replied in public forums by calmly stating the facts from their perspective to refute the customer’s arguments. Here is one response for the record:

“We certainly understand your frustration following unsuccessful trading and that is why we offered you risk-free trades so you could attempt to recover your losses. However, you refused and the TOTAL balance amount in your account was sent back to you. Despite this, you continue to post slanderous accusations…. Furthermore, you made several deposits since you signed up with us in February 2015 and you have been trading actively on your own. In this time, you have made more than 460 trades….. Over and above that, we have been notified that your credit card (that you used to fund your account), has been flagged for fraud activity (on your behalf) in the past with other companies. One can only guess as to what your motives are.”

Concluding Remarks

Is Tradorax a scam? The firm is definitely going out of its way to appear like one. Do its clients understand the ramifications of deposit bonuses and how they can delay withdrawal requests? We doubt that they do. In any event, why bother with the problems of dealing with a broker that is cloaked in anonymity when there are dozens of more reputable firms to choose from?

The binary options market is very competitive, and there are many brokers that can fulfill your basic needs, but you still must ask the tough questions and apply due diligence in your decision making. You do have other alternatives. Be skeptical! Stay vigilant!

Chris Lee

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