Israel’s long-awaited ban on binary options is absolute hogwash and smacks of corruption
Israel reveals its innate corruption as the Knesset deletes important parts of the proposed ban on binary options at the last minute, allowing the underworld to prevail, much to the damage of the online business globally. We investigate in detail
Governments of highly corrupt nations are often prone to spending an absolute fortune from the public purse to drag out a potential legislation which would, if implemented, put a stop to very damaging and nefarious business practices which are running amok, and then giving up at the last moment due to bowing to the leaders of such businesses.
Israel, which is widely renowned for being a developer of high technology, ranging from advanced medical systems to avionics, and has been credited with the invention of several everyday devices that nobody in the modern world could live without, such as the mobile phone and the Intel microprocessor, fits this exact description, unfortunately.
Israel’s binary options industry rose to prominence very very quickly in the middle of the last decade, and has during the past two years become the bete noire of financial markets regulators, mainstream news entities and consumer protection groups, largely because it is about as far removed from a genuine financial product as is humanly imaginable.
The vast binary options business, which bears absolutely no resemblance to genuine electronic trading whatsoever, is indeed a weighted gambling platform masquerading as a retail trading environment, which the operators, most of whom come from adult entertainment, online poker, lead buying (and stealing in some cases) and affiliate marketing backgrounds rather than financial services, use to pocket the deposits of unsuspecting customers worldwide.
Binary options is reviled on a global scale, with France, Belgium, Germany, Denmark, the United States, and Holland having outlawed it, and Britain making a clear point never to regulate it as a financial product.
Mainstream news sources have made large investigations into the activities of these brands and their respective platform providers which are also market makers, as absolutely no binary options business has any connectivity to a live market.
No doubt, mention the word ‘prime brokerage’ or ‘aggregated price feed’ to any of the owners of brands or binary options platform providers and it is unlikely that they will have any idea what either vital component’s teminology means.
Just as binary options firms are beginning to find that the gravy train is inevitably coming to a halt as the doors are closing around the world and the Israel Securities Authority chief Professor Shmuel Hauser has made extensive efforts to extinguish this fraudulent business that is casting a shadow over the genuine electronic trading sector from existence by requesting powers from the Attorney General to ban all of them from conducting any activity whatsoever from Israel, a loophole has appeared.
Thus far, binary options firms have been able to continue their odious activities by creating layers of different entities with registered companies in offshore jurisdictions and client bases in others, whilst only maintaining a service and marketing entity in Israel, which is structured as a separate company, thus circumventing national regulatory laws of every nation that they attract clients in, as well as the law of the State of Israel which stipulates that binary options is illegal.
Indeed, former US secret agent and Israeli intelligence officer Haggai Carmon, who has so far helped victims recover $2 million from binary options fraudsters, likened the way that binary options firms layer their corporate structure to “structures seen only in espionage organizations or among world-class money launderers or terrorist organizations.”
“A top professional tailored the layering,” he said, referring to the practice among money launderers to distance money from its criminal origins by hiding it behind layers of financial transactions. Binary options companies, 90 percent of which, Mr Carmon estimates, operate from Israel, similarly hide behind layers of false identities.
Now, as the Knesset (Israeli parliament) has concluded its Knesset Committee hearings on the instigation of the new laws against binary options, and some companies are closing down their operations, as well as the general consensus being not at all favorable, it looks as though the end appeared to be nigh.
The thing is, the companies concerned have not been actually closing down their operations at all, but simply sitting tight, whilst operating their lobby groups with the government, until the legislation is passed, at which point they will simply run the same system, doing absolutely the same thing, but call it something else.
Very likely, it will be called something much worse than binary options, and will be ‘simplified FX’ or ‘simplified CFDs’ which makes an even more close – and invalid – comparison with our industry of which they bear absolutely no relation whatsoever.
The sheer arrogance of the operators of these Israeli binary options firms is testimony to their understanding that Israel is so corrupt that these borderline criminals actually run the country.
The vast majority of the owners of binary options brands and the ‘platform’ companies and market makers that empower them are not educated, but are extremely forceful and have a dubious past.
They are as far removed from the leaders of the genuine financial services industry globally as cheese is from thermonuclear fission, however they clearly understand that they live and operate from a region in which pretty much anything goes.
No other OECD nation on the planet has allowed a fraudulent business to mimic the genuine financial services business, employ thousands of people and rise to prominence in this way, and then steal tens of millions from unsuspecting members of the public globally, raising its profile to international news and international government level, with no recourse, and when those who challenge the perpetrators do so, they are met with threats of physical violence.
The Knesset (Israeli parliament) has been making attempts to ban the entire binary options sector from operating anywhere globally in any form, whether it be call centers in Israel or marketing divisions, or layered companies with British Virgin Islands registration targeting overseas leads.
In essence, had this gone ahead properly, it would have put a complete stop to any Israel-based entity doing any binary options business anywhere in the world, from anywhere in the world.
The calmness displayed by the operators of these entities – all of whom are not known for their calmness, quite the opposite in fact – demonstrates that they know exactly how Israel operates as a nation.
The same country that allows cartels to block the import of competing goods to the supermarket sector, allows families to run national banks, and maintains a criminal family which operates the country’s national port authority, taking imported goods, impounding them and then selling them via a network of equally disreputable individuals is the same country that is allowing semi-literate binary options fraudsters to have their cake and eat it.
The Knesset Reforms Committee convened two days ago, on Monday, for the first of three sessions this week intended to finalize legislation to ban Israel’s largely fraudulent binary options industry, several of those in attendance were shocked to discover that the draft legislation, unveiled in February, had already been substantively weakened.
The original proposed legislation, which was drafted by the Israel Securities Authority together with the Justice Ministry and the attorney general’s office, would have, if implemented, banned the entire binary options industry, but also, significantly, would have prohibited Israeli forex, CFD (Contracts for Differences) and other online ‘trading’ companies from offering their wares to customers abroad without a license.
It is FinanceFeeds perspective that this should be the case in all regions and that only licenced firms providing genuine products should be in operation, even in the genuine CFD and FX industry, which these binary firms are not, even though they may plan to rename themselves to give the impression of providing access to retail financial markets trading.
The February 2017 draft law stipulated that online trading companies operating from Israel and targeting customers abroad must do so with a licence from the country where they operate, however in the ensuing months, the text was changed, and in its current version — which was approved by the cabinet last month — the ban on binary options stands, but the additional clauses, covering other financial instruments, have been deleted.
This new version of the proposed law was formally published by the Knesset on June 20, but not publicized, and many critics of the industry only discovered the change in the last few days or at Monday’s session.
Professor Shmuel Hauser, Chairman of the Israel Securities Authority has made some headway in forging a path toward banning the entire business globally, and FinanceFeeds had a conversation with his office six months ago during the forging of the new laws, which, when wrote about, we were forced by the Israeli authorities to remove the article, demonstrating once again what has been clear for many years, that Israel does not have free media and allows into public channels only what has been screened by the government.
It continues to stand that the genuine FX and CFD industry is based in Britain, Australia, North America, Singapore, Hong Kong and Japan, with their respective FCA, ASIC, NFA, MAS and JFSA licenses being cornerstones of the retail and institutional OTC electronic trading business. There are also some good quality firms in Cyprus too.
Whilst this level of government pandering by the Knesset to the odious characters, many of whom have done time for other crimes, whose entire binary options business has been condemned worldwide and is potentially damaging to the genuine FX industry is disappointing to say the least, when looking at Israel’s credentials as a business environment, is perhaps hardly surprising.