Binary Options in the News Again as Victims File Lawsuits in Israel

Do you remember the binary options scandal that hit the headlines as far back as 2016? Were you caught up in this scandal that defrauded consumers around the globe of billions of dollars of hard-earned cash? Hopefully, you answered “No” to the latter question. The victims of those heinous crimes are still filing lawsuits, but the likelihood of a payoff down the line is remote.

The first hint of this monumental scam was revealed when Simona Weinglass of The Times of Israeli published her exposé in early 2016. It detailed her first grasp of what was taking place behind a shroud of offshore shell companies and call centres located in Israel.

What was the Binary Options’ scam all about?

More than five years ago, binary options were the new rage in what many observers regarded as nothing more than “legalised online gambling”. The potential for a huge gain in a small timeframe was the draw, but actual loss rates exceeded 90% by most estimates. Many regulators had major problems with this exciting new investment vehicle. US regulators baulked at them, refusing to allow any such activity on US shores.

Organised crime was not deterred. The crooks were already arranging a complex web of shell companies to hide their identities, but the main engine would turn out to be call centres in Israel. These “bucket shops” would call their target, promise outrageous returns, produce a few wins early on to draw in more deposits, and then pocket the cash, never to return a penny in most cases. Aggressive cold callers followed a carefully worded script, demanding more deposits, only later to refuse withdrawal requests and claim accounts balances were zero due to huge losses.

Complaints to Israeli law enforcement authorities fell on deaf ears because no Israeli citizens were victimised. Without complaints from local citizens, no investigations could proceed past square one. No licences were required for the same reason. It seems as though the criminals had done their local homework on how to avoid being shut down. Eventually, however, the press attention forced changes, but no losses were ever recovered.

Will the latest raft of lawsuits produce any favourable results?

Ms Weinglass has been on this trail for more than five years. In her latest update, she presents a review of just ten of the many court cases now weaving their way through the Israeli justice system. The stories are heart-wrenching tales of the plight of unsuspecting victims, but the presence of greed on their part is also part of the story. Although a few lucky plaintiffs have settled out of court, it is, unfortunately, doubtful if any of the billions in losses will ever be recovered.

Concluding Remarks

Binary options may have been legislated out of existence, but the same fraudsters still proliferate in the virtual world of online trading. The products may have new names, but the websites still have fake addresses and identities that appear real. Be vigilant if aggressive cold callers promise huge returns if you forward hard cash to some foreign entities bank account. You are your last line of defence against fraud!

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

Share

Tweet

Safest Forex Brokers 2023

	Broker	Info	Best In	Customer Satisfaction Score
#1	72% of retail CFD accounts lose money. Founded: 2014	Global Forex & CFD Broker	Best Trading Conditions Visit broker	4.9
#2	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#3	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#4	82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#5	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#6	77% of CFD traders lose Founded: 2007	Global CFD & FX Broker	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#7	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#8	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker	5

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.