Around 6,000 investors lost about 1.1 billion AED ($300,000 million) in a Ponzi-like foreign exchange scam in Dubai. This is the third big trading in the Gulf country in the past five years. The debt-loaded investors could have huge implications in the finance industry in the Emirati state.
The trading scam was run from Dubai Media city by a company known as Exential Group. Exential promised returns of up to 120 percent to the investors from the foreign exchange investment.
However, in July this year, the company was ordered by the local regulators to cease operations after the company failed to pay back the due payments to the clients.
Most of the investors had taken a large amount of loans to cover the initial stake that started at 73,500 AED ($20,000). After Existential was ordered to close down, the investors most of whom did not have a large personal asset found it impossible to repay the loans. A Spanish expat who had invested about 650,000 AED ($176,959) stated that he had read about many Ponzi schemes but did not suspect anything with the Forex scheme offered by Exential Group.
Similar to other Ponzi scheme he was getting paid for the initial few years so he opened more accounts. However, when the scheme was discovered after the payments started to dry out, it appeared to him like a jolt out of the blue about the extent of his losses.
Victims Seek Foreign Help to Recover the Amounts
Due to the complex and slow legal process in the UAE, it will take years for the victims to recover the funds through the local courts. That’s why the investors, most of whom are expats are seeking foreign legal help to recover the amounts.
The investors of the Exential Group scam in Dubai had approached a UK based firm to carry out a detailed analysis of the Forex trading scam and try to recover the lost sums for them.
The investigators interviewed different investors who had lost a large sum in the Ponzi-like investment scheme. It was found that Exential was operated by FCI Markets that is based in the British Virgin Islands and licensed by the Financial Services Commission (FSC).
One of the investigators of the British team said that he plans to request the local government in Dubai to initiate a separate investigation regarding the case. The alleged fraudulent company not only failed to fulfill the promise of 120 percent returns but also did not pay back the investment amount to the investors.
Exential Group had used the names of Tadawul ME, Exential Mideast Commercial Brokers LLC, and Exential Mideast Investment LLC. The scam is similar to another Ponzi-like investment scam that had collapsed in 2013 and whose owner was jailed for a period of two years in Dubai.