This is actually a grey area. If offshare brokers do not cross line, CFTC would not care. The line is, if offshare brokers don't solicit US customers,but only accept them when US traders come to them, then CFTC would turn a blind eye. BTW, you are ignorant in thinking traders' money at risk if CFTC does after offshare brokers. NO, even if offshare brokers go bankrupt, traders' fund are still safe because their funds are in segregated accounts. On the other hand, if those US allowed brokers go bankrupt, you guys could lose your funds because those brokers are not required to put customers' funds in segregated accounts. You don't really understand why traders need high leverage. High leverage let traders take many positions in different instruments at the same time, each position only for a small amount. So there is no over risk in any of these positions. If you don't have high leverage, you will miss a lot of opportunities because you don't have enough buying power.
I'll reply to you as you seem to understand better and not to our "buddy" who calls me ignorant. When the CFTC went after Tallinex in Estonia, They said: "Specifically, the Default Order found that Tallinex falsely represented that it was lawfully doing business in the United States, falsely and misleadingly represented that customer funds were segregated and protected in the event of Tallinex’s financial collapse, and Tallinex failed to disclose risks but promoted extraordinary profits of between 162.29% up to 1301.10% to create the impression that forex investments made with it were likely to be profitable so that it could increase its number of customer accounts. Yeah segregated. JAFX from Sophia, CFTC: "Specifically, the CFTC’s Complaint, filed on July 27, 2018, charges that JAFX has been the counterparty to leveraged, retail forex transactions for customers located in the United States, who are not Eligible Contract Participants (ECPs). JAFX allegedly solicits orders from U.S. customers who are not ECPs to open leveraged, retail forex trading accounts through JAFX’s website, as well as videos on YouTube, where JAFX is, or offers to be, the counterparty to each leveraged retail forex transaction. Yeah ECN. Sure!
"OTC FX although supposed to keep client money in seg account if they dont do it and go belly up traders become ordinary unsecured clients of a failed company period" If brokers keep client money in seg account , then clients' money are protected. If they (brokers) dont do it, then they are scams. The majority of brokers are not scams. So the clients of majority brokers are protected.
That is a big If! + not to mention conflict of interest between a MM type OTC and client Also fact remains that in worst case scenario there is no protection in USA/ AUS except in UK for OTC broker clients money SIPC or ASG only applies to brokers dealing in direct shares on exchanges so to claim that clients of majority brokers are protected is a overstatement look at the fine print