Owners of Israeli FX firms that allegedly ran away with client money are now binary options fraudsters. Massive UK exposee still doesn’t wake the regulators
As the media and regulatory pressure mounts against binary options, we take a look at how the owners of binary brands are often connected to the old-school FX scams of the last decade and why the FCA is lagging behind in doing anything about it.
Earlier this year, FinanceFeeds reported that the Israeli and French police and authorities were working together in order to find and prosecute 15 fraudsters which had been on the boards of directors of several firms in Israel, those being 4XP, BForex, Sisma Capital, Tradaxa and Aston Invest, all of which the French government believe to be involved in a massive scam operation that took an average of €210,000 from each victim in France.
The companies involved conducted their business in the usual fashion that is adopted by those who live from the losses of their clients and have deliberately set their firm up to take deposits, then rig the trading platform and never send orders to the markets in order to effectively steal from their customers before cutting and running.
The majority of the firms involved were structured in a way in which a holdings company is operated as a ‘service provider’ based in Israel, which then provides outsourced services to a sales desk, also in Israel but under a different name, and then registers its operations in the British Virgin Islands or a s imilar offshore region, and targets customers across the world but not in Israel itself, where the owners of the companies live.
Most of these firms have since cut and run, and the large majority of their owners are now – yes you’ve guessed it – operating similar fraudulent schemes by running binary options brands.
The only regulatory authorities in the entire world that have actually made progress in attempting to stifle what is a very difficult business to extinguish due to its multi-layered corporate structure that circumvents national regulations, are the United States and France. Both countries have taken active steps to punish binary options firms and outlaw it to the point that any solicitation in their territory is a felony. Now, despite the binary options brands attempting to continue to solicit and ignore the law, the payment processing firms that convey money from clients to binary firms are becoming the subject of sanctions.
The vast media campaign against the binary options industry, as well as the regulatory disdain both in Israel and overseas, has become all-encompassing, with British mainstream newspapers conducting investigations and labeling the entire business a complete fraud, however Britain is still a ripe ground for the fraudsters, all of whom are continuing to rip off British retail customers whilst the otherwise well recognized Financial Conduct Authority (FCA) remains silent. Indeed, the FCA defended PacNet as an FCA regulated payments provider recently, despite the US Treasury labeling it a criminal organization.
PacNet subsidiary Counting House, also on the sanctions list, is a major participant in binary options payment provision, using systems which disguise the origin of the service, thus helping, along with many other algorithmic payment services providers (mostly Israeli and also offshoots of the gambling/binary business) to allow binary firms to make a substantial living by ripping off American customers even though binary options is completely illegal in the United States.
Of the aforementioned names, one of the original founders of the now-defunct brand 4XP is now in the national limelight in Britain, but not for any salubrious reason.
Certain key figures at 4XP who were at the company from its inception, and were also at the company when sister companies FXTG in Australia and Sky FX in Cyprus were established with common shareholders. SkyFX had its license revoked by CySec, and FXTG was sold to YouTradeFX owner Aviv Talmor three years ago, who has since been arrested for money laundering by Israeli police who were waiting for him at the airport when he arrived in Israel earlier this year.
A litany of publicly available sources on the internet allege that monies are still owed to customers since the 4XP brand disappeared.
Today, the British tabloid newspaper The Daily Mail features a large exposee on how Israeli binary options firms are freely ripping off British citizens, with no redress from the authorities. One of the companies featured in the Daily Mail’s report is BinaryBook, which, according to the Daily Mail and the Bureau of Investigative Journalism, is operated by former members of key personnel at 4XP.
A joint investigation by Money Mail and the Bureau of Investigative Journalism found that BinaryBook faces accusations from a number of British savers that they were unable to access cash in their accounts.
The report by the Daily Mail states that on the profiles of Facebook and LinkedIn, staff at both Linkopia and Yukom describe themselves as brokers and account managers.
However, continues the report in the Daily Mail, the firms insist their staff have no say whatsoever on whether customers can withdraw cash. They say BinaryBook has performed more than 19,500 withdrawals in the past 12 months, processing each within 24 hours.
Both Linkopia and Yukom are owned, according to the report by former key figures at now defunct Israel operated FX firms, and also provide services to other binary trading firms.
BinaryBook already features on a U.S. government list of organisations authorities believe are ‘soliciting and accepting funds from U.S. residents illegally.
Police say binary option trading is now one of the biggest fraud risks in the UK.
The National Fraud Intelligence Bureau’s head of crime, Det Chief Insp Andy Fyfe, says police receive two reports of alleged binary trading fraud a day, with the average investor losing £16,000. ‘This is just the tip of the iceberg,’ he says.
FinanceFeeds contacted the Financial Conduct Authority with regard to this, however unlike the authorities in France, America, Israel and Belgium, all nations in which binary options is illegal and in which anyone attempting to sell such things to customers will be prosecuted, British authorities are at odds with where they stand on it.
The Financial Conduct Authority looked at regulating binary options as a financial product in 2014, but subsequently stopped considering doing so based on the amount of fraudulent activity that has occurred globally. The regulator issued official documents detailing its decision, however an official from the FCA argued this with FinanceFeeds, stating that he was not aware of any such directive, until we showed him the documents which are publcily available.
This demonstrated lack of organizational awareness and is worrying when binary options fraudsters are muddying the waters in Britain which is one of the most well respected nations on earth for retail financial services and is home to some of the very top quality industry leaders in the electronic trading field, thus it would be a travesty to see the binary options con artists prevail and do damage to the hard work and continual effort for perfection that is the ethos of London’s finest.
Another related example is NRGBinary, which began its operations by registering itself in Britain, however NRGbinary was run from Israel and sold its products to clients in the Middle East, Canada and South Africa. Within months it had shifted its registration to Cyprus and then to the Seychelles.
Within two years, according to London lawyers and scores of former clients, around a dozen of whom spoke to Reuters, NRGbinary and other companies linked to the same parent group had defrauded hundreds of people out of anywhere between $10,000 and several hundreds of thousands of dollars – millions in all.
Guy Galboiz, the 37-year old who registered the NGBinary website in his name, was one of the initial members of senior management at 4XP. FinanceFeeds is aware of many other former employees who now operate binary options brands.
In a remarkable display of bad taste, BinaryBook’s sales staff were rewarded for their ‘efforts’ recently by being presented with BMW cars – quite rare in Israel where American and Japanese makes are the norm and products such as these are considered low-brow and the preserve of sharks and the nouveau-riche – adorned with ribbons. The Daily Mail managed to obtain a picture of one of the cars being received by, as can be seen here, binary options sales staff at BinaryBook.
The connections between the nefarious owners of failed FX firms that had a closed system and never passed any trades to a live market, operated by people who do not come from nor represent the genuine electronic trading world, instead hailing from affiliate lead buying (or lead stealing in many cases), gambling and adult entertainment are now at the very core of the binary options frauds that have become the bete noire of all regulators and national newspapers globally.
Israel’s government, including Prime Minister Benjamin Netanyahu and ISA Chairman Professor Shmuel Hauser are intent on putting a stop to this practice globally as the damage this does to the very society that raised its perpetrators gains weight on a global scale.