SquaredFinancial Pays €50,000 Fine as CySEC Probes Offshore–EU Business Lines
What Triggered CySEC’s Settlement With a Seychelles Brokerage?
Cyprus’ securities regulator has pulled a Seychelles-registered brokerage into its widening examination of how offshore firms operate alongside licensed European entities. The Cyprus Securities and platform Commission (CySEC) has reached a €50,000 settlement with SQ Sey Ltd, the offshore company behind the SquaredFinancial brand, closing a two-year investigation into alleged activity linked to Cyprus.
The deal was struck under Article 37(4) of the 2009 CySEC Law — a mechanism that allows the regulator to resolve cases without publishing a full administrative ruling. Under this framework, the company pays money into the state treasury and proceedings stop without an admission of wrongdoing or detailed findings.
The notice revealed only the basics: the investigation covered October 2022 through September 2024 and focused on potential breaches of Article 5(1) of Law 87(I)/2017, Cyprus’ MiFID II-based rule requiring a licence for anyone providing investment services “in or from” the country. CySEC did not describe the specific conduct it examined, consistent with the confidential nature of 37(4) settlements.
Even so, the case arrives at a moment when European regulators are zeroing in on blurred lines between EU-regulated entities and their offshore alternatives — especially within the retail sector.
Investor Takeaway
Which Entity Was Named — and Why It Matters
The company targeted, SQ Sey Ltd, operates SquaredFinancial’s global, non-EU business. It is licensed in Seychelles as a Securities Dealer (licence SD024) and runs the group’s offshore website. Meanwhile, Squared Financial (CY) Ltd — the EU-regulated arm — holds a longstanding CySEC licence.
This dual-entity model, where a brokerage maintains a MiFID-regulated company in Cyprus and a higher-leverage offshore unit elsewhere, has become industry. The structure lets firms serve the EU under strict rules while offering diverse conditions in markets like Seychelles, Mauritius or the British Virgin Islands.
On paper, CySEC has no jurisdiction over a Seychelles entity. But Article 5(1) is broad: if any part of the offshore business is carried out “in or from Cyprus,” the regulator can intervene. That includes Cyprus-based staff working for the offshore brand, systems, or client-facing activity that originates from the island even if the legal entity is abroad.
The settlement does not reveal whether the regulator examined staffing, onboarding flows, or marketing practices — but its timing aligns with , including alleged “clones” of regulated brokers.
Why a €50,000 Deal Still Sends a Larger Signal
At €50,000, the SquaredFinancial settlement is small compared with recent CySEC reanswers. Earlier this month, local CFD broker FXNET paid €225,000 over issues linked to retail rules. Other enforcement actions this year have fallen in the €150,000–€200,000 range.
Placed next to those, the SQ Sey deal looks more like a jurisdictional boundary case than a misconduct case involving client losses. But by naming the offshore entity publicly, CySEC has delivered a message: offshore affiliates of EU-licensed brokers can no longer assume they sit completely outside local scrutiny.
The settlement also mirrors a broader pattern in 2024–25: Cypriot authorities are publishing more names, expanding their list of unlicensed websites and pressing brokerage groups to maintain visible separation between EU operations and offshore activities.
Investor Takeaway
What This Means for Brokers Heading Into 2025
The settlement closes CySEC’s investigation into SQ Sey Ltd with no follow-up against the Cyprus-regulated arm, and no further sanctions announced. However, the case lands during a year of tightening regulatory expectations around offshore interaction with EU customers.
Law firms in Cyprus have been warning for months that Article 5(1) applies not only to scam websites but also to established groups if their offshore businesses inadvertently touch Cyprus. Regulators across Europe have echoed similar concerns, worried that offshore brands could enable circumvention of MiFID investor protections.
For brokers operating parallel EU and offshore structures, several pressure points now stand out:
- Marketing flows and routing. Any promotion or communication originating in Cyprus, even if intended for offshore clients, may fall under CySEC’s perimeter.
- Cyprus-based staff supporting offshore operations. Operational roles must be clahead separated to avoid triggering “in or from Cyprus” provisions.
- Brand association and client perception. If an offshore unit trades heavily on a MiFID-regulated brand name, regulators may demand structural clarity.
These issues are now front of mind as CySEC continues to expand its public enforcement footprint.
What Comes Next for SquaredFinancial and the Wider Market?
The €50,000 settlement closes the immediate matter, and CySEC has not indicated any pending action against Squared Financial (CY) Ltd. Yet the episode adds another example of the regulator using low-value settlements to shape behaviour and set expectations.
Heading into 2025, this quieter form of enforcement — naming offshore entities, flagging structural risks and applying measured settlements — is likely to remain central as CySEC navigates grey areas between EU rules and global brokerage models.
