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There are a couple of work moments that stick out in my mind from the LSD-like 18 month period starting in early 2020 and stretching through to mid 2021.
One was being in marketing meetings, looking at the ever-increasing new customer numbers, and thinking ‘are we that good? Or is the world doing all the work for us?’
The other was just before covid began and a journalist from one UK newspaper called up. As yours truly was designated PR man at the time, I spoke to him.
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“David,” he said. “We’re seeing these influencers all over Instagram promoting something called ‘forex’ trading. Do you know anything about that? Some of them are from ‘Love Island’”
“Well, well,” thinks I, as the journo continued his description. “This sounds like the work of an operator based on a balmy island, not too far from the Levant.”
I kept shtoom, of course.
“That is absolutely shocking,” I said, after he’d finished talking. “I can’t imagine anyone who would do something like that. Let me look into it and get back to you.”
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Two companies were behind the campaign. One rhymes with Lord Byron, is an important component in steel-making, and once had its office in Shanghai raided by a group of tiki torch-bearing introducing brokers. The other was BDSwiss.
About a year after that phone call, BDSwiss got banned from operating in the UK by the Financial Conduct Authority.
Readers may have noticed recently that, much like the Circle K in the film ‘Bill and Ted’s Excellent Adventure’, strange things are afoot at BDSwiss.
Staff numbers have fallen by almost 30% in the last six months – and that’s only considering those who have ‘officially’ left. That number also includes pretty much all the company’s senior staff members.
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Social media reviews and comment sections are filled to the brim with complaints about withdrawals not being processed. The company has also had its Cypriot license revoked, even though it wasn’t actually onboarding any retail clients there.
Rumours are swirling that the group has been sold to a new investor, although this is yet to be confirmed. What actually happened?
Two executives that TradeInformer spoke to said that after 2018, the company continued to market in Europe but would shift all clients offshore.
Interestingly this fits with what happened to me back in 2020 when I went to check who these influencers were working with. I was directed by the affiliate, via WhatsApp, to sign up with the firm via an offshore entity.
It also fits with what the FCA said when it banned the company from operating in the UK back in 2021. In the regulator’s ruling, it noted that…
“Between 2017 and 2021, a total of 94,038 UK-resident clients opened accounts with [BDSwiss] firms in the Group. Of these, just 1,095 (1.16% of the total) opened accounts with the Firm. 92,943 (98.84%) opened accounts with the Overseas Firms. Overall, UK-resident clients of the Group lost over 96% of the total monies invested. Over 70 clients lost more than £100,000 each.”
Another interesting finding was that…
“In a 17 month period between 1 January 2020 and 1 June 2021, 129 affiliates were paid a total of £14.7 million for referring 48,038 UK-resident consumers. Five affiliates were paid over £1 million each.”
Fast forward to mid-2023 and CySEC fined BDSwiss EUR 100,000, also for sending European clients offshore. So in case you missed that, BDSwiss – on five occasions – paid out over 10x more in affiliate rebates to a single Instagram influencer than it did to CySEC. No further comment on that.
Anyway, all of these things came together at an interesting juncture. If you look at BDSwiss in 2023, they were probably at a point where they had to stop taking anyone from Europe via their offshore entities.
At the same time, they had just ridden the Covid boom, which made everyone lots of money. And that takes us back to the initial point I made.
It was very easy in 2020 and 2021 to ‘get high on your own supply’. There was an almost unprecedented level of interest in trading online, mixed with huge volatility.
Under those sorts of conditions it’s easy to think you’re awesome and that the good times are going to roll on forever. Sadly they don’t.
In fact, 2023 appears to have been a very difficult year for lots of operators, primarily because several players took huge hits from gold trading.
I don’t think that happened to BDSwiss. What seems more plausible is that they set up their business to target Europe and shovel all of the clients offshore. They stopped being able to do that about 12 to 18 months ago.
Consequently they had to make the switch that everyone else had already made to emerging markets. Unfortunately that is not a simple or easy thing to do and I would imagine it was challenging for them.
The result? You are set up cash flow wise to be onboarding loads of higher value clients from Europe. Suddenly you have to switch to emerging markets. Your cost base and cash flow assumptions haven’t changed though.
The end result is that ‘money in’ becomes less than ‘money out’. Under such circumstances, the incentive to make withdrawals more ‘challenging’ becomes appealing.
