Platforms on edge as industry eyes progress of Currenex case

Lawsuit’s passage through US courts could determine whether copy-cat filings follow

There’s no doubt that the crypto space is one of the hottest places to be right now. Every other week it seems another big name makes the switch from the traditional banking and finance world into the burgeoning sector, and investors from all walks of life are throwing their money at new venues that are springing up in quick succession. 

According to, there are currently 311 exchanges trading spot crypto, and 35 that trade derivatives – most of which have launched in the past couple of years. 

For some, crypto’s status as the coolest kid in class is reminiscent of what it was like back in the early 2000s, when electronic trading in foreign exchange was starting to take off. Innovation was exploding as investors came from outside the industry to try new things. Platforms sprang up everywhere, employing lots of different business models – some worked, some failed.

FX sources who were around at the time say there was a tremendous amount of excitement in the air – the industry had a new tool and was thrilled to discover what could be done with it. 

But like crypto, the unregulated nature of FX meant that, in many respects, people could set up exchanges any way they wanted, and the market would decide what worked. Sources say this led to what they regard as questionable business activity from some of the venues at the time. 

FXCM is often mentioned by way of example, because it’s the only venue that has faced regulatory action which revealed the existence of secret deals in which it granted preferential treatment to a market-maker. 

But some believe that is only the tip of the iceberg. And that’s why the current Currenex lawsuit – which features similar allegations concerning preferential deals – has stirred up so much interest. It raises the possibility that such behaviour might have been more widespread at the time, and not merely confined to FXCM.

The case against Currenex itself faces a number of legal hurdles, notably concerning statutes of limitation. And explaining these issues to a jury is never easy. But if the case is eventually granted class-action status and moves to trial, copy-cat cases might follow.

That means all eyes will be on the case as it makes its way through the US court system – and it could spell a few nervous months for some of the venues and market-makers that were active in those early days of e-FX.

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