SEC puts pressure on binary options firm EZTD to reply to claims about unpaid penalty

Maria Nikolova

The dispute focuses on the SEC’s order requiring EZTD to pay the balance of the disgorgement order of $1.5 million and the civil penalty of $200,000.

As the US authorities continue with their efforts to put an end to binary options fraud, lawsuits against binary options firms and the people behind them become more numerous. One of these actions, brought by the United States Securities and Exchange Commission (SEC) at the Delaware District Court, targets binary options firm EZTD, with the US regulator seeking to compel the firm to pay the full civil monetary penalty and disgorgement imposed upon it back in 2016.

In March this year, the Court entered an Order to Show Cause against EZTD, Inc. to show cause why the Final Commission order requiring EZTD to disgorge $1,515,858 plus prejudgment interest of $57,691, and pay a civil penalty of $200,000, and injunctive relief, should not be granted.

Earlier this week, the SEC filed a Status Report with the Court. The document says that, on May 9, 2019, the Commission learned that EZTD has retained new counsel, and will not consent to the entry of judgment at this time.

Accordingly, the SEC requests that the Court reset the hearing date and briefing schedule. The Commission seeks that EZTD is ordered to file and serve any opposing papers by 6:00 p.m. on May 17, 2019. The proposed order says that if EZTD fails to file opposing papers and/or appear at the scheduled hearing, the Court may find it in default and enter an appropriate order against it at such time without further notice being given.

The Commission notes that this is a summary proceeding, and EZTD was served over two months ago and has had ample time to respond to the Court’s Order to Show Cause.

EZTD is a registered Delaware corporation with a principal place of business in Tel Aviv, Israel and Nicosia, Cyprus, SEC explains.

The penalty stems from a matter involving EZTD’s offers and sales of binary options to US customers, between June 2011 and August 2014, through EZTD’s two online trading platforms, eztrader.com and globaloption.com. The binary options that were the subject of these offers and sales were over the-counter, cash-settled option contracts. They did not give the holder the right to purchase or sell the underlying assets and their time duration was limited. These binary options constituted securities under the federal securities laws.

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