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Abstract:The Cyprus Securities and Exchange Commission (CySEC) has decided to suspend the voting rights of FXOpen EU Ltd’s sole indirect shareholder, Aliaksandr Klimenka, to ensure sound management.
On July 29, 2024, the Cyprus Securities and Exchange Commission (CySEC) announced the suspension of Mr. Aliaksandr Klimenka's voting rights as the only indirect stakeholder of FXOpen EU Ltd, a Cyprus Investment Firm (CIF). The suspension is intended to ensure the company's management is sound and prudent, in compliance with the terms of Cyprus' Investment Services and Activities and Regulated Markets Law, L.87(I)/2017.
The judgment was based on fears that Klimenka's influence as the only indirect stakeholder may jeopardize the firm's effective management. CySEC utilized Article 11(3) of the statute, which allows it to suspend voting rights if it believes a shareholder's influence is damaging to a CIF's operations.
FXOpen EU Ltd's shares are directly owned by FXOpen Ltd, with Klimenka as the ultimate owner. The ban will last six months, giving the corporation time to address the issue and execute the required improvements. This step prevents Klimenka from participating in any decision-making procedures at shareholder meetings, protecting the company's strategic management from any undue influence.
The CySEC's judgment highlights the significance of ensuring the integrity and prudence of Cyprus' regulated enterprises. The regulator examined the severity of Klimenka's power as sole shareholder and determined that suspending voting rights was the most appropriate course of action under the circumstances. The six-month delay permits FXOpen EU Ltd to investigate other approaches and solutions to assure the company's continuing stability.
Aliaksandr Klimenka, a Belarusian and Cypriot citizen, was accused by US authorities of his role in the operation of BTC-e, a now-defunct cryptocurrency exchange. From 2011 until 2017, BTC-e was one of the biggest Bitcoin exchanges, although it gained notoriety for aiding illegal behavior. Klimenka and others reportedly utilized BTC-e to launder approximately $4 billion from a variety of illicit operations, including ransomware attacks, identity theft, and drug trafficking.
Klimenka co-owned BTC-e with Alexander Vinnik and also handled Soft-FX and FX Open, which were engaged in the exchange's activities. Despite doing significant business in the United States, BTC-e failed to comply with rules like as anti-money laundering (AML) procedures and “know your customer” (KYC) standards. Klimenka was detained in Latvia in December 2023 and faces a maximum sentence of 25 years in jail if found guilty on all counts.
CySEC's decision sends a strong signal that the regulator is dedicated to maintaining good governance in Cyprus-based investment businesses. By suspending voting rights, CySEC not only fulfills its responsibility to protect the management of these enterprises, but it also provides the company time to determine a sustainable route ahead. Such measures are critical in sustaining investor trust and guaranteeing the financial sector's stability and regulation.
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