CFTC poised to request default judgment against binary options fraudster Lee Elbaz

Maria Nikolova

Elbaz, who is currently awaiting her sentencing in the criminal case against her, has failed to answer to the CFTC Complaint.

The lawsuit brought by the United States Commodity Futures Trading Commission (CFTC) against the entities and individuals linked to a large-scale binary options fraud scheme evolving around Israel-based Yukom Communications continues at the Illinois Northern District Court.

The list of defendants in this case is pretty long. It includes: Yukom Communications Ltd. (“Yukom”), Linkopia Mauritius Ltd. (“Linkopia”), Wirestech Limited d/b/a BigOption (“Wirestech”), WSB Investment Ltd d/b/a BinaryBook (“WSB”), Zolarex Ltd. d/b/a BinaryOnline (“Zolarex”), Yakov Cohen (“Cohen”), Yossi Herzog (“Herzog”), Lee Elbaz (“Elbaz”) and Shalom Peretz (“Peretz”).

As FinanceFeeds has reported, the Court has set an initial status hearing for October 15, 2019 and instructing the parties to meet and confer pursuant to Federal Rule of Civil Procedure 26(f) and file a joint written status report by October 8, 2019.

On October 3, 2019, the CFTC filed a motion with the Court, asking for extension of the deadline to submit the status report.

The US regulator explains that only one of the Yukom defendants have been served – that is, Lee Elbaz, and none of the Yukom defendants has filed a responsive pleading. This means that the parties are not able to fulsomely comply with their meet and confer obligations or to propose reasonable dates for the completion of discovery in this matter.

On August 23, 2019, the CFTC served Elbaz, the ex-CEO of Yukom Communications, with Summons and the Complaint. Elbaz has failed to answer or otherwise respond to the Complaint, and the Commission anticipates requesting that the Court enter a default judgment against her.

On August 7, 2019, shortly before the filing of the Complaint, Elbaz was convicted by a federal jury of wire fraud and conspiracy to commit wire fraud. She is currently awaiting sentencing in the criminal case.

All of the remaining Yukom defendants are located outside of the United States. The CFTC says that, on August 14, 2019, it initiated service of process as to those defendants pursuant to Federal Rule of Civil Procedure 4(f)(1) and the Hague Convention, but has yet to successfully serve on any of the off-shore defendants.

For example, at the time the Commission filed the Complaint, three of the defendants – Cohen, Herzog, and Peretz, were all believed to be located in Israel. Their respective Summons and Complaint were sent via Registered Mail on August 14, 2019 pursuant to Article 10 of the Hague Convention, As of October 1, 2019, all remain “in transit to destination” according to U.S. Postal Service records.

Recently, the Commission has received information indicating that Cohen may be residing at an undisclosed location in the Congo.

Regarding service on Yukom Communications, on August 14, 2019, the CFTC initiated service on Yukom’s offices in Ceasarea, Israel via Registered Mail pursuant to Article 10 of the Hague Convention. As of October 1, 2019, U.S Postal Service records indicate that the return is “on its way to a USPS facility.”

According to the CFTC’s complaint, from March 2014 through the present, the defendants fraudulently solicited and accepted more than $103 million in connection with their binary options trading scheme. As alleged in the complaint, the defendants have solicited individuals located throughout the U.S. and elsewhere to trade binary options through internet trading websites. The complaint further charges that the defendants have falsely stated that the binary options offered by the five defendant entities are actual transactions subject to objective market conditions when, in fact, they are mere book entries whose outcomes can and have been manipulated to force customer losses.

The CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution for the benefit of customers, permanent registration and trading bans, and a permanent injunction from future violations of the Commodity Exchange Act.

Read this next

Digital Assets

Luxembourg’s regulator warns on false regulation of Crypto Capital Profits

The regulator of Luxembourg’s financial markets, the Commission de Surveillance du Secteur Financier (CSSF), has warned that a firm claiming to be authorized under the name Crypto Capital Profits is in fact not licensed to carry out business from within its jurisdiction.

Institutional FX

FINRA fines Wedbush $900K over reporting violations

The Financial Industry Regulatory Authority continues to take disciplinary actions against financial services firms for providing inaccurate securities trading information.

Digital Assets

Bitkub investigated by Thai regulator in ‘wash trading’ case

Thailand’s Securities and Exchange Commission has targeted Bitkub over allegations of inaccurate reporting and wash trading on its cryptocurrency platform.

Crypto Insider secures approval to launch its services in France has registered its cryptocurrency services with the dual regulatory structure in France, which includes the Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR).

Inside View

How to offer iOS compliant trading apps? Editorial by Chris Rowe

Webtraders are becoming increasingly important for FX and CFD brokers as more and more of their clients are trading using their mobiles. 

Institutional FX

SpiderRock deploys Eventus trade surveillance for futures and options offering

“As we have begun to provide direct market access as a routing broker and grown in our futures offering, which is subject to a different regulator, we wanted to make sure we chose a trade surveillance platform that has all the tools that we need, a format we can review easily, and capabilities to demonstrate to regulators that we have the proper trade surveillance procedures in place. Validus checks all the boxes for us.”

Industry News

Space and Time raises $20 million to grow its decentralized data warehouse

“We look forward to seeing the ways in which Space and Time will allow the business logic in centralized systems to be automated and connected directly to smart contracts.”

Digital Assets

Mastercard, hi app partner to issue cards with NFT avatars

In partnership with Mastercard, crypto and fiat financial app hi is launching what it calls “the world’s first debit card featuring NFT avatar customization.”

Digital Assets

Wirex to support government of Uzbekistan to adopt blockchain

“We’re excited to work alongside the Uzbekistan Direct Investment Fund in order to help the sector thrive, enrich the financial ecosystem there and set a benchmark for other countries, and ultimately expand.”