ED Probe Prompts CySEC Action Against OctaFX Owner On Governance Lapses

The Cyprus Securities and Exchange Commission (CySEC) has suspended the voting rights and management powers of Pavel Prozorov, the ultimate beneficial owner of Octa Markets Cyprus Ltd, and barred him from participating in the company’s management, citing concerns over corporate governance. Prozorov, who holds 95% of Octa Markets Cyprus Ltd shares, has been stripped of all associated voting power.

The decision, taken at CySEC’s meeting on August 25 and made public on September 3, comes amid increasing scrutiny of OctaFX global operations across multiple jurisdictions, particularly in India. CySEC described Prozorov’s continued control as “prejudicial to the management” of the Cyprus Investment Firm (CIF), which operates under the Investment Services and Activities and Regulated Markets Law. Despite his majority ownership, the regulator emphasized that his influence was incompatible with “effective and prudent management,” signaling a decisive crackdown on governance failures.

While Prozorov links both entities as the ultimate beneficial owner, Octa Markets Cyprus Ltd and OctaFX global are separate legal entities. Octa Markets Cyprus Ltd is a Cyprus-registered CIF, fully regulated by CySEC, and operates under Cyprus law. In contrast, OctaFX is a global forex trading brand operating in multiple countries, including India, through subsidiaries such as OctaFX India (now renamed Tauga Private Limited). The two companies share ownership but operate independently, with distinct regulatory obligations in each jurisdiction.

According to sources, CySEC suspended Prozorov’s voting rights and management powers in Octa Markets Cyprus Ltd following concerns that his continued control could jeopardize the integrity and governance of the Cyprus-registered CIF. The decision came against the backdrop of the ED investigation into his other firm, OctaFX Global, which has already led to the attachment of his assets worth Rs 131.45 crore, including a luxury yacht, a mini-jet boat, a high-end car, and two residential properties in Spain.

According to official sources, CySEC’s suspension of Prozorov in Octa Markets Cyprus Ltd was not related to asset attachment but driven by corporate governance concerns. As the 95% shareholder, Prozorov’s involvement in a company under ED investigation was deemed a significant risk to the sound and prudent management of the Cyprus entity. The regulator described his control as “prejudicial to the management” and barred him from holding board or management positions, highlighting the need to safeguard investors, maintain regulatory standards, and protect the firm from reputational and operational risks linked to cross-border financial misconduct.

Octa Markets Cyprus Ltd stated in their statement-

First of all, we would like to emphasize that Octa Markets Cyprus Ltd does not offer or provide services in India, as clearly stated in our Client Agreement. All the measures taken by Octa Markets Cyprus Ltd to meet CySEC's recommendations and requirements are rooted in the company's determination to be fully compliant with the European law. These measures are in no way related to or caused by any law enforcement or legal procedures carried out by the Indian authorities.

To abide by the CySEC's decision, Octa Markets Cyprus Ltd has excluded Mr. Pavel Prozorov from exercising management duties to its Board of Directors. He is currently not holding any executive or decision-making positions in the company. It is worth noting that none of the executives or managers of Octa Markets Cyprus Ltd is involved in any legal proceedings or investigations.

The CySEC’s action mirrors enforcement efforts in India. According to ED sources, officials have shared their investigation findings with financial regulators across Asia and Europe. These include the Unit for Combating Money Laundering (MOKAS) in Cyprus, the Monetary Authority of Singapore (MAS) in Singapore, the Securities Commission Malaysia (SC) and its Enforcement Division, along with Bank Negara Malaysia, and in Sri Lanka, the Central Bank of Sri Lanka (CBSL), Exchange Control Department. In Europe, the findings have been shared with supervisory bodies under the umbrella of the European Securities and Markets Authority (ESMA), which coordinates oversight of investment firms across EU member states.

In its investigation findings,the ED has alleged that OctaFX operates a global network of digital platforms and fake influencers to lure investors with promises of high returns in speculative forex schemes. The agency flagged a clear pattern of regulatory evasion, cross-border layering of funds, and systematic targeting of emerging markets including India.

Investigators said OctaFX bypassed Reserve Bank of India (RBI) regulations, laundering investor funds through shell entities and cryptocurrency channels across multiple countries. Funds were routed via layered transactions and overseas shell entities to disguise their true origin. The ED has also frozen several OctaFX-linked bank accounts, issued lookout notices against key executives, and is planning to approach Interpol for Red Corner Notices against Prozorov and others.

Meanwhile, OctaFX’s Indian arm, OctaFX India, settled with the Securities and Exchange Board of India (SEBI) in July 2025 by paying Rs 32 lakh under the regulator’s consent mechanism. As part of the settlement, the company surrendered its SEBI registration (No. INZ000294138), is barred from applying for fresh registration for five years, and is prohibited from trading in Indian securities markets, directly or indirectly, for one year. The settlement resolved allegations that the company violated trading norms by operating an unregulated forex platform. OctaFX India has since been renamed Tauga Private Limited, and the agreement included both monetary and non-monetary penalties.