Adversary proceedings against AFX Capital Markets get adjourned again

The adversary proceedings against Forex broker AFX Capital Markets have been adjourned again. This is made clear by a document submitted by counsel for Ronald J. Friedman, Esq, at the New York Eastern Bankruptcy Court on January 20, 2022.

The document, seen by FX News Group, states that the Pre-Trial Conferences in the adversary proceedings, scheduled for January 25, 2022, before the Honorable Elizabeth S. Stong, United States Bankruptcy Judge, have been adjourned to March 15, 2022. This marks year another delay in the case which was launched in April 2018. The hearing has been adjourned for various reasons for more than two years.

The Complaint alleges that in 2015 and 2016, Gallant Capital Markets deposited about $2.35 million into a Gallant account maintained at AFX. About two weeks before Gallant commenced its bankruptcy case, there was a balance of approximately $2.4 million in the Gallant account at AFX. Back then, Gallant requested several times that AFX returned Gallant’s funds. These requests, however, were disregarded.

The complaint further alleges that AFX withdrew the remaining balance, lacking any authorization and without any basis, in violation of the automatic stay.

In these adversary proceedings brought by Gallant’s Chapter 11 Trustee, the Trustee seeks a turnover of Gallant property and recovery of assets of the Gallant estate.

Back in September 2019, the Chapter 11 trustee filed a motion for sanctions, arguing that the AFX defendants have engaged in a manipulative strategy of delay, obfuscation, and fabrication in failing to comply with a stipulation of settlement.

The proceedings have not marked any meaningful progress ever since.

But while there has been no significant change in the proceedings against AFX Capital in the United States, the UK authorities have taken action to compensate the victims of AFX Markets Ltd.

The UK Financial Services Compensation Scheme (FSCS) has provided instructions to AFX Markets’ customers who are seeking compensation. FSCS is now officially open to claims from customers who invested with AFX Markets Ltd. Working closely with the Joint Special Administrators (JSAs) from CG&Co, FSCS has agreed on a process with the JSAs to review customer claims and pay compensation on eligible claims.

FSCS protection does not extend to claims against AFX Capital Markets Ltd, a Cyprus-based entity which is regulated by the Cyprus Securities and Exchange Commission (CySEC).