Forex and derivatives platform Prospero Markets has its licence suspended

Prospero Markets, which has links to companies recently raided by the AFP in relation to a $229m money laundering claim, has had its financial services licence suspended.

Police executing a search warrant at Changjiang Currency Exchange in Sydney as part of Operation Avarus-Nightwolf.

Forex and CFD trading platform Prospero Markets, which is linked to the Changjiang Currency Exchange which was raided by the Australian Federal Police in late October, has had its Australian financial services licence suspended and has agreed not to deal in client funds.

The Australian Securities and Investments Commission said on Friday that Box Hill, Victoria--based Prospero had agreed not to deal in client funds without its permission, and would have its financial services licence suspended until February 28.

Prospero had failed to lodged its annual financial statement and audit report for the 2023 financial year, ASIC said, breaching its obligations as an AFSL holder.

“If Prospero fails to lodge its annual financial statement and audit report for the financial year ending 30 June, 2023 during the suspension period, ASIC will consider whether the licence should be suspended for a further period or cancelled,’’ the regulator said in a statement.

ASIC said it started an investigation of suspected contraventions of the Corporations Act by Prospero in the period from March 1, 2021.

The Australian revealed on November 3 that Prospero had told its clients that its bank accounts had been frozen and that it would soon lose the ability to function.

The bank accounts were frozen on the same day that the AFP raided the Changjiang Currency Exchange, which operates currency remittance storefronts across the nation.

The AFP is alleging that CCE was being secretly run by the Long River money laundering syndicate, which it says has laundered almost $229m of proceeds of crime over the past three years.

Police at the Sydney storefront of Changjiang Currency Exchange.

Four Chinese nationals and three Australian citizens were charged for their alleged involvement in the money laundering syndicate, with the AFP executing more than 20 search warrants in a major operation involving more than 240 offices and 92 specialist members.

The so-called Operation Avarus-Nightwolf also seized more than $50m worth of property and vehicles.

Police have not confirmed a link between Prospero and CCE, however The Australian has established the link exists. The Australian is not suggesting any wrongdoing on behalf of Prospero.

The Prospero platform is understood to focus on serving Australia’s Chinese community, with the website also offered in Chinese and its current and former directors largely hailing from China originally.

An email sent to clients in late October, sighted by The Australian says “We regret to inform you that Prospero Markets’ bank accounts including but not limited to its Client Money bank accounts have been frozen by the banks’’.

“We are in the process of contacting the relevant banks to have these accounts unfrozen.

“As a result, we have been unable to process your deposits and withdrawals, as well as other required dealings in these accounts, since October 25.

“We are working to rectify this as quickly as possible.’’

The AFP operation occurred on October 25.

The AFP was asked at the time by The Australian to confirm a link between Prospero and Changjiang but said only: “As part of the recent Taskforce Avarus Operation Nightwolf overt activity, the AFP-led Criminal Assets Confiscation Taskforce has not restrained any assets from Prospero Markets or Changjiang businesses’’.

The Australian’s investigations show that a former director of Prospero, Chen Xin Sheng, 67, and Chen Zhou, 37, of Balwyn, who was arrested at the family’s $10m mansion, have in the past listed the same address as their residence.

Mr Chen, 37, lists several former companies with the corporate regulator as being registered at a property in Templestowe, Victoria, which Chen Xin Sheng lists as their residence when they were a director of Prospero, for a brief period from March-June in 2021.

The younger Mr Chen was last week charged with two counts of conspiring to deal and engage in conduct with the proceeds of general crime, valued at $10m or more.

The property where Mr Chen was residing, a $10m mansion in Balwyn, has been seized by police.

Records sourced from the Australian Securities and Investments Commission show that the former ultimate holding company of Prospero was CJ Prime Financial, which had as its sole director Ding Wang, who was also arrested during the raids last month.

Qu Ye, of Kew, who was also charged, appears as a director on company documents transferring the ownership of Prospero from Cayman Islands-based LQY Markets Limited to CJ Prime Financial, in 2020.

Mr Qu was also a director of Prospero from May 2020 until March 2021.

A source has told The Australian that it is common knowledge in the Chinese community that Changjiang Currency Exchange and Prospero were run by the same people.

ASIC said Prospero was assisting with its investigation.

Prospero also has the right to apply to the Administrative Appeals Tribunal for a review of ASIC’s decision to suspend its AFS licence.

The Australian has been unable to contact Prospero Markets for comment.