Court approves agreement between Receiver and Skrill in binary options fraud case

Maria Nikolova

When approached by the Receiver, Skrill indicated that it would turn over the funds if the Receiver would release any and all claims he has against Skrill.

As the US authorities continue their clampdown on illegal binary options offering, the recovery of funds in one such case has marked some progress. On Thursday, August 30, 2018, Judge Timothy J. Corrigan of the Florida Middle District Court approved an agreement between Kenneth Dante Murena, the court-appointed Receiver in a binary options fraud case, and Skrill Ltd.

The action was launched by the United States Commodity Futures Trading Commission (CFTC) back in the summer of 2017. It targets Jason B. Scharf, who was doing business as and, CIT Investments LLC, Brevspand EOOD, CIT Investments Ltd., A & J Media Partners, Inc., Michael Shah, and Zilmil, Inc. The Complaint charges the defendants with violations of the Commodity Exchange Act.

The Receiver’s investigation into the assets of the binary options companies revealed that Skrill is holding funds in the amount of $24,796.31 on behalf of Brevspand EOOD pursuant to one or more agreements between Brevspand EOOD and Skrill, whereby Skrill agreed to process credit and debit card transactions for Brevspand EOOD in accordance with the terms of those agreement(s). In exchange for such services, Skrill received a small percentage of the processed funds as a fee.

When approached by the Receiver, Skrill indicated that it would turn over the funds if the Receiver would release any and all claims he has against Skrill.

Under the terms of the Agreement, the Receiver and the Skrill agree that Skrill shall remit to the Receiver a total of $24,796.31 (USD) and the Receiver shall release all claims the Receiver may have and/or assert against Skrill on behalf of Brevspand EOOD.

The Agreement is seen as beneficial because it will result in the Estate recovering substantial funds Skrill received from Brevspand EOOD without the need to pursue costly and protracted litigation and/or collection efforts against the Skrill, which is located in the United Kingdom. Further, the Agreement allows the Receiver to expeditiously recover funds and bring much needed funds into the Receiver’s fiduciary account, which at present has insufficient funds to even cover the fees and costs incurred by the Receiver during the third application period (January 1, 2018 through March 31, 2018).

Under the fourth report recently filed by Mr Murena and covering the period from April 1, 2018 to June 30, 2018, the Receiver has frozen and/or recovered more than $9.3 million of the defendants’ funds, of which more than $6 million was transferred to the Receiver’s fiduciary accounts and approximately $3.3 million remains frozen at various financial institutions.

The bulk of the funds recovered come from the binary options marketers – Michael Shah and his company Zilmil. Let’s recall that, according to the CFTC Complaint, between July 2012 and the present, Shah and Zilmil made more than $18.6 million in proceeds from their fraudulent scheme.

The defendants induced people to deposit money with illegal binary options trading websites that claimed to offer customers the ability to trade binary options online. The defendants acted as marketers for the following binary options websites: LBinary, Global Trader 365, Vault Options, TraderXP, Trade Rush, Banc de Binary, Citrades, OptionMint, OptionRally, RBOptions, Bloombex Options, Redwood Options, BeeOptions, Amber Options, OptionsXO, and SpotFN. None of these websites or their operators are or ever have been registered to offer binary options contracts to the public.

The case is captioned Commodity Futures Trading Commission v. Scharf et al (3:17-cv-00774).

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