Ainvesting and 8Invest: Same story as Xtrade?In the course of our legal practice, we have come across elements that bring Ainvesting and 8Invest closer to Xtrade. Indeed, our legal expertise concerns the rights of traders and the malpractices of Forex and CFD brokers. We are therefore able to represent and defend individual investors who find themselves victims of fraudulent schemes.
1. Market Making Forex and CFDs Services
1.1. Ainvesting Business Model
Ainvesting introduced itself as a premier global provider of CFD (Contracts for Difference) trading services, offering real-time quotes and rates on forex, shares, commodities, cryptocurrencies, and indices, offering a wide range of financial services, including portfolio management, liquidity services, and hedging for European financial entities.
Under their Best Execution Policy it is clearly provided for that Ainvesting is acting as market maker, i.e. is the sole counterparty to the trades of the investors. This general means that when an investor is losing under his trading positions, Ainvesting is making profit from these losses.
Further, Ainvesting.eu states that 83.8% of retail investor accounts lose money when trading CFDs with this provider. We may reasonably conclude that the majority of Ainvesting’s retail clients are losing their investments, which losses become the profit of Ainvesting.
1.2. 8Invest Business Model
8Invest boasts a rich and extensive background in the financial services sector. With a focus on providing competitive trading conditions across various asset classes, 8Invest has successfully granted its clients direct entry to high-quality liquidity for more than a decade.
Contrary to Ainvesting.eu. 8Invest states that “63.3% of retail investor accounts lose money when trading CFDs with this provider”.
However, both platforms being operated by a single entity (see below), such discrepency in the percentage of losing trader is not possible and may be qualified as a misrepresentation.
The best execution policy provides for that for CFDs, 8Invest acts for its own account, i.e. as market maker.
2. Connections between Ainvesting, 8Invest and Xtrade
Ainvesting and 8Invest are trading platforms operated by the Bulgarian company Uptrend Ltd, authorized and regulated by the Bulgarian Financial Supervision Commission. As such, it operates under the MiFID and is accessible to European citizens accros the EU.
Uptrend Ltd is a subsidiary of the company GUMA Holdings Ltd, Cyprus, which owns the brand Xtrade outside Europe. Under the LEI register, XTRADE.AU PTY LTD (up to the end of 2023) and MERBA LIMITED (former name Xtrade Europe Ltd) are subsidiaires of GUMA Holdings Ltd. Thus, all the brands and platforms Ainveting, 8Invest and Xtrade, are operated by, and part of, the same group of companies.
3. History of Xtrade
We know today about Xtrade that:
3.1. CySEC partially suspended the licence of Xtrade Europe Ltd in 2017. Among others, CySEC pointed out that:
- the marketing material disseminated by the Xtrade Europe Ltd and/or its associates (affiliates/Introducing Brokers/Business Introducers – ‘associates’) does not seem to be fair, clear and not misleading; and
- Xtrade Europe Ltd does not seem to have in place adequate policies and procedures sufficient to ensure its compliance with the above – considering its inability to control and monitor the marketing material that the Company and/or its associates disseminate.
3.2. ASIC canceled the licence of retail OTC derivative issuer XTrade.AU Pty Limited in Australia, subsidiary of GUMA Holdings Ltd.
According to ASIC, between June 2018 and September 2022, XTrade failed to meet key obligations as an Australian Financial Services (AFS) licensee, according to ASIC. The company’s violations included:
• Engaging in unconscionable conduct, negatively impacting clients.
• Neglecting to ensure compliance with financial service laws by its representatives.
• Lack of arrangements for effective conflict-of-interest management.
• Failure to ensure that product distribution aligned with target market determinations.
• Inadequate efforts to ensure fairness and efficiency in providing financial services.
Additionally, ASIC found that XTrade prioritized its own interests over those of its clients, failing to act in good faith and not meeting the required standards expected of AFS licensees.
The investigation also revealed that XTrade allowed repeated misconduct by its representatives, spanning several years, and failed to provide them with necessary training.
4. Are the Forex platform Ainvesting and 8Invest operated under the same model as Xtrade?
In other words, could we suspect that Ainvesting and 8invest are Forex & CFDs Scams or fraud?
Formally no, since both platforms are regulated and authorised to provide financial services in the EU. However, given the track record of Xtrade, investors should be cautious before investing.
One thing is sure: Ainvesting is receiving certain criticism from websites such as TrustPilot or wikifx.com from investors who are unhappy with their experience5.
It is interesting to note that users of the Ainvesting platform have the same concerns and experiences as people who invested with Xtrade. If Ainvesting may be suspected of not acting in the interest of its clients, it would be doing so in the same way as Xtrade, whose deceptive practices CySEC and ASIC have already pointed out.
As lawyers specializing in Forex and CFDs investments and trading, we recommend you to be careful when choosing a trading platform. Especially when it comes to entities that are not regulated by the European financial authorities, about which you have little general information or guarantees regarding your capital. If you need legal advice or legal representation against a broker, do not hesitate to contact us.
1* https://static.ainvesting.eu/documents/eu/order-execution-policy.pdf
2* https://www.8invest.eu/uploads/8_INVEST_Order_Execution_Policy_AA_c0bd80306c.pdf
3* https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=c38a56ca-061b-4f19-9b0b-dbb70d2c2b12
5* https://www.trustpilot.com/review/www.ainvesting.eu?stars=1
