High profile British investigative reporter lambasts binary options, labeling it a complete fraud
“Leaving aside the fact that hundreds of fraudsters are operating in the area, setting up fake online platforms to steal your money, not paying back a penny even on winning “investments”, with Action Fraud receiving 305 reports about binary options in the past year, the maths of binary trading will never work out for you” – Sathnam Sanghera, The Times, London
The nefarious nature of binary options firms has attracted the attention of mainstream newspapers, national regulators and even government officials themselves recently, to the point at which entire countries have outlawed the entire business, and many look to be following suit.
The sudden and very high profile government level and media attention that retail OTC binary options industry has been receiving over the past few months has now manifested itself at senior government level in Israel, home to the vast majority of brands that sell and distribute binary options to an overseas customer base, as well as home to all of the platform providers and market makers.
It is certainly more than debatable as to whether binary options in its now quite established form is part of the financial markets business at all, its six major platform developers/market makers and the respective white label brands that use such platforms to sell to a retail audience, of which there are approximately 300 worldwide, approaching a marketplace so vast and global from a completely different background and standpoint to those who have gained their professional experience in the financial and technology institutions of London, Chicago and New York.
Israel, the United States and Belgium have all outlawed binary options trading on an OTC basis, as well as banned any firm that provides this from operating in their jurisdictions.
Britain is a very interesting region and a massive target for binary options fraudsters, largely due to their background in lead buying (and in some cases lead stealing!) from gambling firms with offices in Israel that operate on an online basis in Britain, where gambling is legal (!!!!)
For those who consider binary options to have any future in Britain, it may be time to redress this thought. Yes, Britain has a legalized gambling industry, however, as FinanceFeeds has pointed out before, binary options is worse than gambling because binary options brands and the platform developers which offer market making are disguising a gambling product with odds weighted completely in favor of the house as a bona fide financial markets product when it bears absolutely no resemblance to such thing whatsoever.
This week, and investigator called Sathnam Sanghera who Tweets as @Sathnam conducted research that he intended to publish in mainstream British newspapers to blow open the entire nature of the back street business of binary options.
Mr. Sanghera then published the entire findings, with the gloves off completely, in The Times, which is one of Britain’s most esteemed broadsheets.
“The plan, this week, was to dabble in binary options trading with a small amount of my own money, lose it, and thereby demonstrate the danger and idiocy of the financial fad. Things started to go awry, however, when my experiment with the investment technique, which involves taking one-way, short-term bets on currencies, indices, commodities and shares, resulted, somewhat awkwardly, in a profit” Mr. Sanghera wrote.
“On Tuesday morning, I spent £10,000 betting variously that the silver price would go above a certain level in a certain time (based on a tip in Investors Chronicle), that the FTSE 100 would close down by a certain amount by 3pm (based on a bunch of negative headlines in the business press), and that the US Tech 100 would conclude lower on the day (based on Apple being pursued for tax by the EU), and while one position failed (with binary trading, if you bet incorrectly on the market’s direction you lose your entire investment), I ended up £386.92 on the day. Nandos on me” he wrote.
“At least, it would have been, if I hadn’t been trading with virtual money on a demo account, having been frightened half to death just by the experience of registering interest with binary options websites. You’ve probably seen some negative press on this kind of trading, given the US has banned overseas binary options firms from targeting its citizens, numerous countries, including the US, Canada and France, are investigating Israel-based binary options fraud, and Belgium’s financial services and markets authority has decided to ban binary options companies from operating in the country. But you only need to google these sites to see something dodgy is going on” – Sathnam Sanghera, for The Times
Mr. Sanghera then went into great detail about the nature of the adverts that are used by binary options firms, stating that they are “plastered with pictures of supercars, champagne, stills from The Wolf of Wall Street and preposterous endorsements from unrealistic individuals claiming to have made instant riches.” – Indeed, very low-rent, bottom rung imagery aimed at luring the council-estate classes with lottery winning aspirations or gambling addictions.
As FinanceFeeds reported this week following our own investigation into how the customer onboarding process works, we were told by one CEO of a binary brand “We target people who are addicted to gambling. We look to get leads from all sources and funnels, and if people working here can bring leads then this is better.” This means that not only do they recycle leads from poker sites and then pretend to offer a gambler a financial product in order to ‘steal’ money on false pretenses, but also they hire sales staff who have stolen leads from their previous employer. This entire scenario paints the picture of people with the morals of a tomcat and the business acumen of Captain Caveman.
Mr. Sanghera reported very publicly this morning
“Leaving aside the fact that hundreds of fraudsters are operating in the area, setting up fake online platforms to steal your money, not paying back a penny even on winning “investments”, with Action Fraud receiving 305 reports about binary options in the past year, the maths of binary trading will never work out for you.”
Last Saturday, Times reporter Harry Wilson said “You would have better odds of making money from betting repeatedly on the fall of a 50p coin than from binary options, where a sustained return requires a success rate of better than 55 per cent.”
The result of Mr. Sanghera’s investigation was that his £10,000 account, after a series of calamitous bets, made a loss of £9,993.70, an amount of money that Mr. Sanghera noted would be extremely hard to lose so quickly in any other form of investment. It is worth bearing in mind that if this were a live account, Mr, Sangram’s loss would have been the house’s gain, as there are absolutely no live feeds, no connection to the financial markets whatsoever and odds in favor of the house.
In FinanceFeeds opinion, you may as well cut out the platform aspect altogether, as it is irrelevant. Instead, just pay your cash into the account of the binary brand owner which would then likely be spent on some oversized chrome wheels and window tinting for his 150 decibel car, a year’s supply of chewing gum, or perhaps an additional gold chain to wear around his neck.
“Frankly, you’d have to be very naive to go near any binary trading in any form with any actual money, and depressingly, this seems to be the case” – Satnam Sanghera, The Times
Mr. Sanghera approached City of London Police about this, stating that they explained that a third of victims of binary options fraud are under the age of 30 and close to one in ten are in their teens. Apparently regulators are struggling to work out how to outlaw the activity, but while they work it out, the Premier League football clubs and Olympic athletes who take sponsorship from such binary trading firms, who essentially rely on exploiting the gullibility of the young, should hang their heads in shame.
Recently, the FCA considered making binary options trading regulated by transferring it from the Gambling Commission to the FCA – however in light of the fraudulent nature of that sector, the FCA has decided never to regulate it as a financial markets activity.
Unfortunately, this has not prevented the perpetrators from going large, as most of the companies offering binary options are based in Israel, however they circumvent the ban of these products by registering their businesses offshore and targeting clients in other regions of the world.
The understanding of operations and business model employed by many binary brands is also representative of a complete dichotomy from those abroad, largely because the binary options industry did not rise up from the interbank or technology sectors that it did overseas, and was not established by financial markets professionals with strings of qualifications and shareholders to report to.
Now that the net is closing in and governments are onto the entire binary options business, considering it fraudulent in that affiliate marketing, lead buying and gambling entities recycle customers from gambling to binary under the same roof, which is a very common practice.
These days, with the nefarious nature of the low-rent binary options industry having had its very dirty laundry aired publicly, in mainstream news sources and now at the hands of the Israeli government, where the Chairman of the Israel Securities Authority Shmuel Hauser has been veciforously outspoken with regard to his disdain for the entire business whose fraudulent actions he considers to be a danger to the entire economy of the nation, vowing that he would expedite laws to make international sanctions possible to close the loophole that firms have long been using in Israel, that being to register their businesses offshore, and target customers in various locations outside of the region in which the company is based, often using fake names and fake location details.
America, Belgium and France are of the absolute same opinion, and many regulators around the globe are now working with governments internationally to attempt to extinguish this thorn in the side of the internet-based ecommerce world, which pretends to be part of the electronic trading industry. FinanceFeeds has made its stance clear on several occasions that we do not regard binary options as part of our industry at all.
Will it soon be ‘Game Over?” and will the fraudsters be made to face the music?