Israeli binary options fraudsters will never beat global crackdown. We obtain official government information
As the net closes in on binary options, there is no chance of a fightback against the crackdown. Regulatory authorities are now going after firms even if they process data through servers in their jurisdiction. Here are the full details
During the past few months, FinanceFeeds has been instrumental in conducting in-depth research into the methods by which the fraudulent binary options ‘industry’ works, and has made substantial reporting efforts for what we consider to be the greater good of the genuine electronic trading industry.
Since its rise to prominence in 2011, binary options has been a thorn in the side of the retail and institutional FX and wider electronic trading business, as binary options platform providers / market makers steal millions of dollars from private individuals all over the world who believe that they are investing in a financial product, when in actual reality, it is nothing of the sort.
Gambling against a house that is completely weighted in favor of the house itself, in this case the platform providers, all of which are based in Israel, and all of whom do not come from the genuine financial services business or technology industry, instead hailing from lead-buying (and in some cases lead-stealing!), casinos, adult entertainment and affiliate marketing, yet disguises itself as a currency trading system, binary options is one of the largest fraudulent activities on the agenda for many financial regulators and governments in a large number of countries.
The global crackdown on binary options extends from China, where Baidu has banned any form of media marketing by binary options firms, to North America, where providing OTC binary options to a retail audience is a serious felony and contravenes the Exchange regulations set out by the Securities and Exchange Commission.
FinanceFeeds today obtained some key information from government officials, which not only proves that many binary options firms are still flouting the law by stealing money from American citizens, but also shows that the attempts by the binary options firms to counteract this crackdown will be absolutely futile.
Previously during our investigations, we have highlighted cases in which, instead of toning down their behavior in light of such high profile discourse against their activities, many binary options firms are actually becoming more gregarious and are stealing larger amounts of money, cases of which can be viewed here.
Our most recent research demonstrates that binary firms which use smoke and mirror tactics to avoid being caught by authorities which only have jurisdiction over their own territory is about to be brought to a halt.
This is because many firms originate in Israel, yet process their traffic via various offshore jurisdictions as well as other nations. Now, the financial authorities are aware of this and are not just issuing warnings, but actually responding to customers in order to gain all information so that the perpetrators can be prosecuted.
In one particular case, an Israeli platform provider is providing market making facilities to a binary brand called Porter Finance, which uses a ‘portfolio manager’ (there is no such thing in binary options, as there is no live market and no transactions take place) called Greymountain Management.
The firms took almost $3 million from one particular customer, who decided that he was not going to take that lying down, and approached the authorities in the regions in which these firms, and their platform provider, host and execute their business, one of such places being Luxembourg.
The client, an American citizen living in America, which means that he has been solicited illegally in the first place by the binary options firm, approached the Luxembourg CSSF, and expected to receive a reply that indicates that he is not using a firm regulated by them and there is no recourse, however this is not what materialized.
Instead, the Luxembourg authorities stated that they will go after the fraudsters if all information is turned over to them, even though the fraud was committed outside Luxembourg, yet was conducted via servers in Luxembourg – and the most interesting aspect is that since 2005, the Luxembourg CSSF has had a memorandum of understanding to cooperate with Israeli authorities, allowing them to bring to book the actual providers and market makers themselves in Israel.
The recipient of this letter explained to FinanceFeeds that he now has the full backing of the US and Luxembourg authorities, which in turn have the abilities to work with the Israeli authorities, and that he intends to take this all the way and not just to accept a settlement but to help the regulators put a stop to this activity by handing over full details which links the market maker to the brand and the whereabouts of each operation.
In Israel, the chief of the national regulator, Shmuel Hauser, managed to get binary options banned under gambling laws as gambling is illegal in Israel, and is now embarking on a fully fledged mission to put an end to the entire business altogether by putting new laws through the Knesset (Israeli parliament) to, in Professor Hauser’s own words “quash the entire filthy business.”
Belgium has outlawed binary options, unfortunately along with other FX and derivative products, and France has banned binary options and is working with Israeli police to catch 15 directors of warehouse FX firms and binary brands in order to hold them accountable for their actions in a criminal court.
The Financial Conduct Authority in Britain has decided not to license binary options as a financial markets product, despite considering doing so relatively recently. The FCA’s decision not to proceed was down to the number of scams that have been perpetrated by binary options firms.
France and Belgium will not hear of it, either, and although not in Europe, Israel will not hear of such a thing despite most of the platform providers and market makers in the binary options business being based in Israel.
FinanceFeeds continues to uphold the view that this is not part of the genuine electronic trading industry at all, hails from a totally different background, and is amoral and nefarious, the actions of its perpetrators causing immeasurable damage for those in the real electronic trading industry, operating from bona fide jurisdictions.
Instead of a well documented career that has resulted in refined experience and top quality relationships with the very best in the business, founded on internships with blue chip companies, followed by several senior executive positions within technology providers, banks and institutional firms before heading toward leadership with a comprehensive understanding of the industry and the refined business ethic that goes with the very top leaders in the FX industry, binary options is a total contrast, a world of low-brow criminals with no career to speak of other than buying (and in some cases stealing!) leads from gambling sites.
The difference between the two is as visible as it is audible.
Recently, as the jaws of the crusher close in on the binary options firms, some of its leaders formed an unofficial back-street lobbyists, many of whom are proprietors of the major binary options providers and brands, held a secret meeting in Cyprus to establish the EUBOA, an acronym, itself mis-spelled, of European Brokers Association.
At the meeting were senior members of staff (I will not call them executives) from major binary options firms including SpotOption and TechFinancials. SpotOption, which is the company leading the lobby, has a Cyprus entity which rather tenuously calls itself an ‘exchange’, which is an absolute misuse of the term. None of these companies are exchanges, neither are they OTC derivatives dealers because there are no price feeds whatsoever – it is you against the house.
When looking at the most successful firms in the business, even more concern should arise. 24Option, one of the largest brands that uses TechFinancials’ platform, was raided by Israeli police three years ago, one of its shareholders having been removed from the office and arrested. Just days later, the firm upped sticks and move to Ireland.
TRADOLOGIC, one of the largest platform providers in the binary options business, was subject to a similar matter when one of its major shareholders was arrested for money laundering and fraud.
Other major firms in the sector include Banc de Binary, which was subject to an $11 million fine from the CFTC for illegally soliciting US customers despite having been in receipt of a cease and desist order prior to the charges issued against the firm in 2013.
Anyoption, one of the largest brands, is owned and operated by Shay Ben-Asulin, who was charged by the Securities and Exchange Commission in America in 2011 for participating in pump-and-dump schemes and for engaging in a fraudulent scheme to conceal the sales of millions of shares of their companies, netting him and his 7 accomplices $33 million, yet he went on to found a large binary options brand after this, continuing to satisfy his thirst for ripping people off.
Hardly the most salubrious set of people, and the powers that be in senior government positions globally are well aware of this, and are now taking an active role.
Given the Israeli government’s disdain for binary options, which Professor Hauser, the Chairman of the Israel Securities Authority, has described as ‘filth that is destroying the name of my country‘, working on this via memorandum of understanding (displayed in full below) would likely be a welcome activity indeed.