Receiver appointed in case against binary options scheme operator

A court in the US state of Florida has announced the appointment of a temporary receiver in a case against people and firms accused of participating in a fraudulent binary options scheme.

The court said that Melanie Damian from Damian & Valori LLP would take on the role in the case, which is being brought in part by the Commodity Futures Trading Commission (CFTC).

The CFTC is currently bringing a fraud case against a number of individuals in relation to the case, including a man named Daniel Fingerhut as well as two people from Tel Aviv – Itay Barak and Tal Valariola.

The three are accused of running a firm called Digital Platinum Limited (DPL).

They are also associated with firms called Digital Platinum, Inc. (DPI) in the US and Huf Mediya Ltd. (Huf) in Bulgaria.

Binary options schemes induce traders to select from just one option or another when speculating on a particular outcome.

The practice has been widely discredited by the wider industry, with many leading figures advising against its use.

The charges were first brought about earlier this year.

At the time, the CFTC released a number of serious accusations against the defendants in relation to the case.

It claimed, for example, that the alleged crimes took place over a time span of five years or so.

“According to the complaint, beginning in at least October 2013 and continuing through August 2018, the defendants allegedly created fraudulent marketing materials which promised astronomical profits with no risk of loss and disseminated them via email spam and by making videos available online,” it said.

It went on to claim that well over 50,000 people set up accounts for trading purposes.

It added: “Over 59,000 customers opened and funded trading accounts as a result of these fraudulent marketing campaigns, which generated payments of over $20 million in commissions to the defendants.

“According to the complaint, the marketing materials touted fake trading performance using advertised binary options and digital asset trading software and systems.

“The marketing videos typically featured actors – often posing in front of props such as mansions and private jets – who falsely claimed they had become rich trading.”

However, thanks to the court’s latest order, the new development means that Melanie Damian will now be responsible for some aspects of managing property belonging to the defendants.

The CFTC, however, has gone further than just direct financial crime in the scope of its allegations.

In its press release regarding charges earlier this year, the major regulator also accused Fingerhut of being false or misleading – despite having sworn an oath to tell the truth.

“The complaint also charges Fingerhut with making materially false or misleading statements to CFTC staff, including while under oath, in an apparent effort to conceal the extent of his role in the fraud and to avoid producing documents,” it said.

“The complaint is related to a previously filed multi-million dollar retail binary options fraud action,” it added in the statement.

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.

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