Court orders operatives of crypto, binary options scam to pay $7 million
The binary options industry has been in the news again as the US derivatives regulator hits several marketing firms and their operators, mostly based out of Israel, with a combined $7 million fine for operating a fraudulent trading scheme.
Today, the CFTC has obtained a permanent injunction from the U.S. District Court for the Southern District of Florida against Daniel Fingerhut alongside Itay Barak, Tal Valariola and their company Digital Platinum Limited (DPL).
On regulatory grounds, these names were sued for operating binary options and cryptocurrency scam that defrauded investors to the tune of $15 million. They were working with a few brokers and marketed extravagant lifestyles, which they claim to have earned via online trading.
The case involves two massive solicitation schemes that had been running from October 2013 to August 2018, one involving binary options and the other digital assets, the CFTC said.
The binary options defendants were named as Tal Valariola and Itay Barak, both from Tel Aviv, and were charged with operating an Israel-based marketing company, Digital Platinum Limited (DPL). The agency says their business allegedly “aided and abetted” an offshore company called All in Publishing (AIP), which was accused of marketing fraudulent binary options to American and foreign investors on behalf of their associated brokers, who paid AIP and DPL commissions.
The regulator said the promotional content produced by these fraudsters was viewed millions of times and caused more than 60,000 people to open accounts to trade binaries, forex, metals, cryptos, among other assets, with their unregulated brokers.
The complaint also names a Florida resident, Daniel Fingerhut, who was charged with creating the fraudulent solicitations related to binary options on behalf of AIP. Fingerhut also managed Digital Platinum Defendants’ affiliate marketing program during this time. He was also part of the crypto scheme where investors were lured into the associated broker with the promise that they could use algorithmic trading software or a “bot” that would trade for them.
“The orders find that Fingerhut, Barak and Valariola created, disseminated and/or facilitated the use of fraudulent solicitations in emails, websites, and video sales letters promising free access to purportedly successful automated trading systems that traded on behalf of clients in binary options involving commodity interests and digital assets. These solicitations misrepresented hypothetical and fictitious trading results as real results, and used fabricated customer testimonials,” the CFTC said.