What’s Wrong with Crown Forex?
Crown Forex should be one of the best brokers out there. It has a large customer base and is supposed to have a lot of money in the bank. Unlike a lot of “semi-Swiss” brokers that just have a virtual Swiss office, Crown has a real office in Switzerland and is a member of ARIF.
There were the usual complaints about slippage and requotes in the broker reviews at Forex Peace Army, but almost all brokers get those kinds of complaints some of the time. Plenty of bad traders blame the broker when trades go wrong. In Crown’s case, a lot of big traders used them and reported no serious issues with deposits and withdrawals. Then, around the beginning of September, 2008, something seemed to go terribly wrong with the withdrawal process.
In late September and early October, the FPA began to receive complaints against Crown. It started with 2 people and quickly escalated to over 1 dozen traders who were unable to get money out of their accounts. Most also reported that Crown had stopped replying to emails. FPA Investigator Tessa eventually asked one of the moderators to create a single thread for all the people to post in to make it easier to organize a group to address Crown Forex issues.
A lot of people complain to the FPA if a withdrawal takes over a week. This was different. These were not brand new traders who panicked after a 2 day delay in withdrawals. These were professional traders and account managers. All of them had been trying to get an answer from Crown for at least several weeks. Most of the accounts were over $50,000. Those that phoned were frequently promised that transfers would take place “very soon”. The amount of money disputed quickly exceeded $1,000,000.
Not only was Crown ignoring withdrawal requests, but there were suddenly large MF charges leveled against several of the accounts in question. A few phone calls revealed these were maintenance fees placed on swap free accounts. All the traders involved seemed very surprised to find this form of fee being applied retroactively and could find no mention of these fees in their no swap, no fee trading agreements with Crown. One trader was promised that these new fees would be waived, but Crown’s representative would not answer questions about waiving these fees for the other accounts. Several traders also reported having profitable positions removed, even though there were no issues with margin.
Some of the traders were told they could get their money transferred, but only $50,000 per week. Tessa directly asked a Crown Forex representative about this limitation more than once, but never got an answer. When some money did begin to flow, some traders owed over $50,000 seemed to get their money all at once. Others got one payment, and are waiting on the rest of their money. One trader only finally got Crown to acknowledge that he had an account after the FPA and the trader both sent the account info to one of Crown’s managers several times over the span of 1 month.
One of the few answers that Crown did offer to the FPA was that some of the delays were due to traders changing banking info, so the new bank accounts had to be properly linked to the trader to comply with AML regulations. This would be very reasonable, except that the bulk of the traders involved had not changed any of their banking info and were using the same accounts that had previously been used to make deposits and withdrawals.
Two of the traders who did get money reported some unusually large transfer fees. $400 in one case and $800 in another. Both traders asked Crown about this and neither has reported getting an sort of real explanation yet.
At this time, at least one of the traders has retained a lawyer since Crown only paid him the first $50,000 on November 17th and still owes him a considerable sum. Crown Forex didn’t make the promised payment the next week and have continued to sit on his money while not responding to messages he sends or those sent from his lawyer.
One possible answer for all this foot dragging on withdrawals by Crown Forex is that they have applied for a Swiss banking license. To get this, they need a minimum amount of money in the bank. The delays processing withdrawals for the traders who complained to the FPA meant that they more than 1 million extra dollars in the bank during this application process. There’s no way to tell how many other traders are still fighting to get their money out of Crown Forex and just how large a sum that represents.
All of this means that I truly have to wonder what percentage of Crown’s deposits needed to meet Swiss regulations should have been returned to traders weeks or even months ago. I doubt the auditors in charge of helping verify things have been made fully aware of just how much money Crown is returning to traders as slowly as possible, if at all. Is it possible that Crown Forex would really not meet the minimum requirements for that license they want if all the money owed had been returned to traders in a timely fashion? Does Crown have any other fiscal issues that they are using that money to conceal? I doubt anyone outside of Crown Forex’s senior management really knows. I do know that these reports make it look like something is seriously wrong at Crown.
I’d like to thank FPA Investigator Tessa for providing me with the information needed (minus names, account numbers, and other identifying details) needed to write this article.
UPDATE: The FPA Scam Investigations Committee declared Crown Forex issued a Scam Finding against Crown Forex on May 20, 2009. You can read more about this here: