Behind the High Leverage Temptation: Illegal Financing Hidden in "Futures Trader" Recruitment | Jiemian Finance 315

Interface News Reporter | Han Li

“10x leverage, easily turning your wealth dreams into reality.”

“Futures trading with no barriers, professional mentors to guide you, no capital verification required for account opening!”

Behind these tempting slogans, there are often serious risks of illegal off-market futures financing.

Since 2025, the Ministry of Public Security has publicly announced multiple typical cases of illegal securities and futures business operations. Several criminal gangs using “sub-accounts software,” high-leverage financing, and other methods to amass wealth have been apprehended.

Illegal futures financing refers to activities where, without approval from financial regulatory authorities, unlicensed institutions or individuals lend funds to investors at multiples higher than the investor’s margin, for futures trading, and collect interest, fees, or profit sharing. This behavior is often called “off-market financing.” Unlike legitimate futures companies that provide margin trading according to regulatory standards, illegal financing operates outside regulatory oversight, with no third-party fund custody, and trades may not even be matched on exchanges. Essentially, it is an illegal business activity.

The most common illegal futures financing model currently involves using “sub-accounts software” for system-based account segmentation. The operation is not complicated but has certain covert features: criminals first open one or more main accounts with legitimate futures companies. Then, they rent or develop specialized “sub-accounts software” to technically split the main account into thousands of virtual sub-accounts, which are assigned to investors.

The app investors download appears fully functional, with real-time market data synchronized with the actual market. However, in reality, buy and sell orders may not directly reach the exchange but instead “idle” within the software system or generate large amounts of fees through high-frequency trading.

For example, a recent case disclosed by the Beijing Chaoyang District Procuratorate involved Wang and others recruiting clients for their illegal platform under the guise of “hiring elite traders.” Their “Investment Advisor Selection Agreement” promised “real trading accounts with capital amounts of 200,000, 300,000, 400,000, 500,000, and 1 million yuan,” and claimed “profits over 30% can pass the assessment,” with “90% of profits settled weekly to the traders.”

According to Wang, the source of the trading capital came from two parts: one was Wang and Qian’s own funds and a small amount of trader deposits; the other was funds raised by Wang through a company he controlled—Lai Cai Company (pseudonym)—which previously raised funds as a private equity fund. When the fund reached its liquidation threshold and could no longer operate, Wang signed loan agreements with clients, converting the remaining four to five million yuan into company loans for futures trading, some of which were used for sub-account trading.

To minimize their own risks in trading, the gang carefully designed two operational models. One is the risk-backstop model, where traders do not need to provide margin. The company sets up an automatic stop-loss mechanism, bearing losses up to 8% per trade. When traders profit significantly, the company’s share ratio decreases, seemingly offering benefits but actually incentivizing traders to generate more profit for the company; when traders profit only slightly, the company’s share ratio increases.

The other is a risk-shifting model, where traders must pay high margins (ratio of 1:3 to 1:5). Losses are deducted from their margin until forced liquidation. If traders profit, the company also takes a share. In this model, the principal lent by the company is well protected, and the company no longer bears market fluctuation risks.

According to prosecutors involved in the case, regardless of the model, the profit points are clearly fixed. As long as trading occurs, Wang’s company can steadily charge 1.5 times the standard futures trading fees, on top of the exchange’s normal commissions. The more frequent the trades, the more substantial this income becomes.

Interface News learned that off-market financing is not new, but since last year’s surge in futures trading, illegal futures financing behind “futures traders” seems to be resurging. On social media and image-sharing platforms, reporters found multiple recruitment posts for futures traders and operators.

Lawyer Zheng Wenxun of Tianzhi Lan (Chengdu) Law Firm told Interface News that illegal financing platforms attract investors mainly by exploiting their desire for high returns and the mentality of “small investment, big gains” to quickly realize high profits.

“Salespeople at many financing platforms like to showcase returns and share success stories. They promote false cases of short-term excess profits and profit screenshots to lure investors, emphasizing ‘short time, high returns’ to mislead them into ignoring risks and high financing fees/interest. Some illegal platforms even offer ‘signal calling’ services, falsely advertising the abilities of ‘signal teachers,’ creating unrealistic expectations that following their signals will lead to quick wealth.”

Zheng Wenxun said these tactics exploit investors’ hopes of “getting rich overnight” and create “profit traps.” Additionally, these illegal platforms heavily promote phrases like “low threshold, instant transfer,” but in reality, they do not carefully verify investors’ basic information or conduct proper suitability assessments, which are legal requirements. This “convenience” is a key factor causing many investors to fall into traps.

Regulatory authorities continue to send a strong “zero tolerance” message against illegal financing.

From the case of Xie Ping in Suqian, Jiangsu, to Wang Haoh in Bengbu, Anhui, involved amounts often reach hundreds of millions of yuan, with multiple defendants sentenced to fixed-term imprisonment for illegal business operations.

Local regulators have also issued frequent risk alerts. The Tianjin Securities Regulatory Bureau explicitly states that organizing off-market futures financing constitutes illegal futures business, and those involved will be prosecuted by police. Regulatory departments in Heilongjiang, Xinjiang, and other regions have also issued notices warning investors to beware of off-market financing traps.

Zheng Wenxun explained that illegal futures financing increases trading risks because futures trading inherently involves leverage. When investors engage in illegal financing on top of this, it’s like “leverage on top of leverage,” greatly amplifying gains and losses, and significantly increasing risks. Many financing companies lack strict management and risk control mechanisms, leading to reckless forced liquidations and harming investors’ rights. For the entire futures industry, unlicensed financing activities disrupt normal market trading and interfere with market price mechanisms.