introducing into binary option and the fight against …...introduction into binary options and the...

Frans Roest & Walter Leonhardt

Introduction into

Binary Options and the fight against Binary Option - Investment - fraud

Introduction into Binary Options and the fight against Binary Option – Investment - fraud Frans Roest / Walter Leonhardt

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Table of Contents

0. Introduction ................................................................................................................................. 2

1. Introduction to Investment Fraud with Binary Options .............................................................. 6

2. Fraudulent binary options and the watchdogs ........................................................................... 13

3. Binary options fraud victims feel helpless; stronger prosecution by the authorities is needed. 20

4. Recent legal actions against binary options scams related to Israel .......................................... 21

4.1 Israel ................................................................................................................................... 21

4.2 USA .................................................................................................................................... 23

4.2.1 Bloombex Options und Partnerfirmen vor Gericht ..................................................... 23

4.2.2 Verdict against CEO of Yukom Communications ....................................................... 24

4.3 Canada ................................................................................................................................ 25

4.4 EUROJUST arrests in Europe ............................................................................................ 26

5. Private asset tracking and recovery companies related to Israel ............................................... 28

5.1 Legal asset recovery firms ................................................................................................. 28

5.2 Suspected illegal asset recovery firms ............................................................................... 29

6. Recommended fraud victim initiatives ..................................................................................... 33

7. What to do? ............................................................................................................................... 34

7.1 What can cheated investors do? .......................................................................................... 34

7.2 What can police do?............................................................................................................ 35

7.3 What can financial watchdogs do? ..................................................................................... 35

7.4 What can financial institutions and payment service providers do?................................... 35

7.5 What can website hosting companies and internet providers do? ...................................... 36

7.6 What can telecommunication companies do?..................................................................... 36

7.7 What can binary options software operators do? ................................................................ 37

8. Biography .................................................................................................................................. 37

About the authors

Frans Roest is a Dutch expert on investment fraud. He has written various books and papers on this

subject. His latest e-book dates from 2017 and is called “Share Fraud & Boiler Room Scams

Exposed”. More info at www.boilerroomfraud.be.

Walter Leonhardt is a German open-source intelligence analyst. He has written various books and

papers about various topics.

Recommended citation

Roest, Frans; Leonhardt, Walter (2020): Introduction into Binary Options and the fight against Binary Option -

Investment – Fraud, Omeath & Antwerpen, August 2020.

https://www.linkedin.com/in/frans-roest-mr-rfa-0ba79823/

https://www.boilerroomfraud.be/


https://www.linkedin.com/in/tenthman/

https://greifswald.academia.edu/WalterLeonhardt

https://greifswald.academia.edu/WalterLeonhardt


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English

0. Introduction

Let's suppose an Israeli makes you an offer to place a wager with him under the following

conditions: He gives you the object of the bet and tells you that its price should fall or rise above a

certain value by a certain time. This means that the value must not simply rise, but must rise above

a certain level and remain there until the end of the deadline. All you have to do is to say yes or no.

If you are right, you win at most one hundred percent minus a service fee, if you are wrong, you

lose everything. The fee and your losses will go to your trading partner, who at the same time

regulates your bet, for example by providing the trading platform. It doesn't represent the betting

object in real time, but can vary a little bit in time, namely according to your smartness between

some seconds up to several hours, so that the outcome of the bet might be known to your trader

from the beginning and he controls the betting odds accordingly, so that you give everything in any

case. Because your betting partner not only sets all betting parameters, but he alone also controls

that all rules are followed. At the same time, your betting partner is willing to bet with you in any

amount, because you have to bring cash in advance of your bet while he plays the bank and

manages all bets. So you are not only betting on whether you will succeed in your wager, but also

on whether your betting partner is able and willing to pay. And you don't know anything about him.

You don't even know he's from Israel. Instead, he might tell you he's based in London.1

You can assume that he's solvent, but his willingness to pay you out depends solely on his good

will, because you have no legal means of pressure, which means that if he doesn't pay, you can

hardly ask anyone for help. You don't even know which country he's in, you only know his website.

So, you have to take your entire investment as a loss in this case.

At the same time your betting partner has market knowledge, while you have little knowledge of the

betting market itself. You don't even know that it's a betting market, but believe that an investment

is taking place. And to fill your knowledge gap, your trading partner provides you with free training

material and an fee-free investment advisor who receives rewards if you lose. And even if

everything works out, i.e. you don't lose and get your profit paid out, you have to pay up to 25

1 See Weinglass/Horovitz 2016


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percent of it to the tax authority. Would you make that bet? Yes or no?

The answer is "probably yes", because this form of offer causes addictive behavior like Speed and

releases considerable amounts of adrenaline:2 Common sense is thus gradually switched off and you

feel great. Because when you win, you feel more alert and carefree. You feel neither hungry nor

thirsty nor tired, but feel extremely capable and ready to take all the risks. But if you lose, you feel

worse than bad, because you are irritable and feel a lot of anxiety, with aggression, depression and

hope alternating, driving you crazy.3 Typical gambling madness. But because you are told that this

is not a wager, but a trader's business, you don't feel guilty because the risks and side effects of

betting are known and considered as harmful. But investment is good, even if the odds are higher in

classic roulette than in binary options trading. Because in a casino you can at least calculate the

probabilities, whereas in binary options trading everything depends on your trading partner. And he

can basically do anything as long as he is creative enough to find a reason.

So much about the legitimate binary options business.4 This is also known as „the perfect financial

game“.5 In this paper we focus on the less perfect game, namely fraudulent binary options traders,

for whom all these factors aren't enough in their favor and who therefore eliminate any chance of a

client for ever winning.

2 See Murphy 2018

3 Cf. checkit! 2016: 1

4 The AMF writes that even the practises of some regulated platforms from EU countries are similar to those of

illegally operating traders (see AMF 2017: 7f.).

5 See Binaryoptions.co.uk o.D. C

Illustration 1: https://www.binaryoptions.co.uk/tradologic


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In legal binary options trading, three percent of all investors in average come out as winners and get

more money back than they put in. Eighty percent of all customers suffer total loss. 6 This amounts

to an average of 2,000 euros per customer. In fraudulent binary options trading, the average loss rate

is around one hundred percent and the average amount of damages is 22,000 euros per investor.7

And the number of investors is gigantic: according to the FBI, fraudulent binary options alone

generated ten billion euros in sales per year worldwide in the recent past. French clients alone

contributed four billion euros between 2011 and 2017.8 In Canada, binary options were at times

considered the biggest investor threat.9

Ten billion divided by 22,000 corresponds to 454,000 people exploited each year by fraudulent

binary options. How many more customers have honestly lost their money through the perfect

financial game is unknown. But when you consider that binary options and other highly speculative

products at times made up fifty percent of all online advertising for financial products, the number

must be enormous. Especially when you realise that there is a whole industry of binary options in

Israel, which at times employed up to ten thousand people.

6 See Money Mail Reporter for the Daily Mail 2017; cf. Newman 2016

7 See Newman 2016; cf. Murphy 2018

8 Cf. Weinglass 2017b

9 Cf. Weinglass/Horovitz 2016; cf. Weinglass 2017a

Illustration 2: SpotOption training material (cf. Newman 2016)


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Illustration 3: AMF 2017: 5


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And, last but not least: they also advertised with European Champions League class football teams

like Paris Saint Germain,10 Juventus,11 Liverpool Football Club,12 etc.13

1. Introduction to Investment Fraud with Binary Options

Binary options are also called “financial fixed odds bets”, “binary bets” or “Finanzwetten”.14 In

principle, they have already been around since 1927, but only became known in the mid-2000s,

after the Northern American Derivatives Exchange ("NADEX") began operating and presented

10 See Nikolova 2017a

11 See Finance Magnates Staff 2016

12 See Mizrahi 2015

13 Cf. Nikolova 2017c; cf. AMF 2017: 10

14 Cf. Raw 2009: 3; cf. Deker et al. 2019

Illustration 4: Mizrahi 2015

https://en.m.wikipedia.org/wiki/Nadex


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itself as a binary options exchange to the public.15 At the same time, the industry benefited from

consumer concerns in the wake of the 2008 Great Depression and the collapse of Goldman Sachs,

as well as from advances in mobile technology. In particular, the use of smartphones ensured that

the unregulated market grew wildly.16

Binary options are similar to vanilla options, but unlike them, they're short-term, but have a fixed

interest rate and a fixed investment. This makes them ("rien ne va plus") inflexible, so they're

classified as "financial spreadbettings".17

15 Cf. Mizrahi 2016; cf. Kolková/Lenertová 2016: 53

16 Cf. Murphy 2018

17 See Kiiskinen 2016: 20-22; see ibid. 26f.; cf. Smith 2019

Illustration 5: Binary Option vs. vanilla American option (cf. Kiiskinen 2016: 22; cf. Smith 2019).


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They stand in the middle between investment and betting. In some countries they're considered a

wager, which is why the profits are tax-free there.18 In other countries, such as the USA, they're

classified as investments, so you have to pay twenty-five percent tax on your profits.19

In binary options, investors place a bet against their trader. The trader says: "At time x in the future,

the value of the Dow Jones index, a currency or a certain stock rises or falls to at least the following

value y - is this right or wrong? If you say "right", you buy an option, if you say "wrong", you make

another bet that the value y of the betting object at time x is below it - you buy an option as well.

The Office of Education and Advocacy writes about this type of call/put binary option:

„The yes/no proposition connected to the binary option might be something as straightforward

as whether the stock price of XYZ company will be above $9.36 per share at 2:30 pm on a

particular day pr whether the price of silver will be above $33.40 per ounce at 11:17 am on a

particular day. Once the option holder acquires a binary option, there is no further decision for

the holder to make as to whether or not to exercise the binary option because binary options

exercise automatically.”20

If your forecast is right, you're in-the-money and get your stake plus a percentage profit share of

less than one hundred percent. If it was wrong, you're "out-of-the-money" and lose the entire placed

betting capital.21 A binary options trader said: „The client isn't actually buying anything. What he's

buying is a promise from our company that we will pay him. It's gambling and we're a bookie“22

The Director of the Central Bank of Ireland, Derville Rowland, confirms this view when she says

that binary options are as much an investment as betting on a horse.23

Every binary options transaction is tied to time: fast trades last less than sixty seconds, the longest

18 Cf. Raw 2008: 3

19 Cf. Kolková/Lenertová 2016: 52f.

20 Cf. SEC Office of Education and Advocacy 2013: 1

21 Cf. SEC Office of Education and Advocacy 2013: 2

22 Weinglass 2016a

23 Cf. RTÉ 2019

Illustration 6: http://www.binaryoptions.co.uk/spotoption


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up to several months. In 2010, the most popular trading lengths were 5.15 minutes, one hour or one

day.24 Meanwhile, the average betting duration has increased after binary options transactions with

a betting time of less than one hour have been internationally banned.25

Binary options have a bad reputation. Several factors are responsible for this. First, they're

advertised by Internet trading portals as a financial instrument where little or no knowledge of the

stock markets is needed. Instead, one can "play along" immediately.26 Two financial analysts from

the Technical University of Ostrava tried to "replay" binary options and had to use sophisticated

mathematical models to get close to the profit zone in the long term. "Close" means 44 percent by

473 tries. That neither sound profitable nor easy.27 And even if traders might tell now about the

24 Cf. Kolková/Lenertová 2016: 54

25 Cf. FSMA 2016: 2. What is prohibited under the regulation?; for Canada, see Martin 2017

26 Siehe auch FSMA 2016: 4. Why is the distribution of binary options and derivative contracts with a maturity of less

than an hour prohibited?

27 Cf. Kolková/Lenertová 2016: 57f.

Illustration 7: Binary Option-"gaming-models" (cf. Kiiskinen 2016: 7-9; cf.

Kolková/Lenertová 2016: 54; see also Mitchell 2020).


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difference of academic knowledge and trader's practise, professional investors also agree that

nobody can predict prices for such short periods of time based on facts without manipulation.28

In addition, thirdly, investors have a negative cumulative payout to traders: the latter possess a

house advantage - like casinos in roulette through zero - whereby, unlike the casino, the house

advantage isn't fixed. On average, investors receive an eighty percent payout on "investment

success".29 This means that if you are five times right and four times wrong, the result is plus minus

zero. This means that the average probability of winning a simple Binary Options investment bet is

less than 45% by nature, in European Roulette with one zero it's 48.65% (18/37), in American

Roulette with zero and double zero it's 46.37% (18/38).30

28 See Weinglass 2016a; see Kiiskinen 2016: 25-27: Questions 2 & 6

29 Cf. Kiiskinen 2016: 2; cf. Smith 2019

30 See Brilijant o.D.: 9f.; see SEC Office of Education and Advocacy 2013: 2

Illustration 8: Brilijant o.D.

Illustration 9: ASIC 2019: 4


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Playing Roulette is therefore statistically safer than Binary Options trading, although Binary

Options traders distract from this fact by offering cashback functions, for example.31

„This particular Web site pays $71 for each successful $100 'trade'. If you lose, you get back

$15. Let's say you make 1,000 'trades' and win 545 of them. Your profit is $38,695. But your

455 losses will cost you $38,675. In other words, you must win 54.5% of the time just to

break even“32

Last but not least, the binary options gambling structure is highly addictive.33 Andrew Saks writes

about this:

„It is widely recognized that many binary options brands have also interests in poker and

gaming sites, and then when the gambler has lost enough money, the brands transfer the lead

to their binary options desk and try to convince the gambler that he should not gamble, but

instead trade the financial markets, which is a blatant and outright attempt to mislead.”34

With binary options, you lose. Or, in other words, only three percent of investors make a profit.

Seventeen percent get at least some money back, eighty percent lose up to everything and come

back with nothing. The typical client looks like this: he invests 2,000 USD and thus makes 220

Binary Options bets within five months until he stops investing.35 This means that the Binary

Options market is targeting micro-investors: About one third of all speculators are low-income

earners.36 In addition to people on the dole and over-indebted, many senior citizens are also

targeted.37 The Bureau of Investigative Journalism writes that many pensioners are frustrated by the

banks' zero interest rate policy and are misled to believe that binary options are a conservative

short-term investment strategy. Younger people, on the other hand, are lured by photos of expensive

watches and sports cars.38 Binary Options patron Pini Peter said in an interview that binary options

are financial instruments for people for whom other forms of investment are too difficult:

„This is a simple financial product that anyone can trade. Anyone that could not trade forex

because it is too sophisticated – even I can’t trade on MT4 because it is too complex for me –

can trade binary options. They make it easy, up or down, 85% payout.“39

31 Cf. Pape 2010; cf. SEC Office of Education and Advocacy 2013: 2

32 Pape 2010

33 Cf. Murphy 2018; cf. Saks 2016

34 Saks 2016

35 Cf. Newman 2016

36 Cf. ASIC 2019: 2

37 Cf. SEC 2013; cf. FSMA 2016: 1. Why this regulation?; cf. Weinglass 2018

38 Cf. Newman et al. 2016; vgl. Murphy 2018

39 Mizrahi 2016


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The French financial authority AMF writes that most investors are inexperienced, which makes

them completely dependent on the advice of their “consultants”, who only benefit when the investor

makes a loss.40 For some, the dependency goes so far that the investment advisor can use AnyDesk

or TeamViewer to gain remote access to the customer's computer and directly manage their

business.41

In case of remote support, however, there is already a risk of abuse at an early stage of the business

relationship:

„They told us to look up people’s homes on Google Maps to see how rich they seemed and to

check their credit card information to see if they had gold or platinum status. Also, when we

offered training to them, we would share their desktop and walk them through the website. We

were told to [abuse that access and] look around their desktop for pornography or online slots

or other signs of compulsive behavior, because that means they’re more likely to make a

deposit“42

The Central Bank of Ireland has prohibited the entire offer for Ireland with explicit reference to the

40 Cf. AMF 2017: 2

41 Cf. Murphy 2018; siehe hierzu Carlsson 2020

42 Weinglass 2016a

Illustration 10: One of numerous examples on Youtube (https://www.youtube.com/watch?v=ofHk0mFbu1I)

https://anydesk.com/de

https://www.teamviewer.com/de/


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educational level of binary options customers.

In Australia, one third of all complaints to national financial authorities relate to the rather small

investment field of Binary Options and CFDs.43 In France, forty percent of all investor complaints

in 2016 related to Binary Options and Forex trading.44 In Canada, they were temporarily considered

to be the greatest investor threat by the authorities.45

2. Fraudulent binary options and the watchdogs

In the USA, the SEC and CFTC supervise trading in binary options. As early as 2013, they

published together a not-to-be-misunderstood Investor Alert entitled: "Investor Alert Binary options

and fraud" to warn investors about fraudulent promotions with binary options and binary options

trading platforms in general.46

According to SEC/CFTC, customer complaints can be divided into three categories at least:

1. trading platforms refuse to credit profits to client accounts or pay out their funds.

2. data abuse and identity theft; or

3. software manipulation to generate losses.47

In the first case, clients open accounts on the trading platforms and transfer funds to them. After a

certain initial phase, customers are encouraged by call center "VIP advisors", "account managers"

43 Cf. ASIC 2019: 3

44 Cf. AMF 2017: 4

45 Cf. Weinglass 2017a; cf. Martin 2017

46 Cf. SEC Office of Investor Education and Advocacy 2013

47 Cf. SEC Office of Investor Education and Advocacy 2013: 2

Illustrat

ion 11: Central Bank of Ireland 2019: 1


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etc. to increase their deposits and to bet more money ("foot in the door").48 Once customers request

a withdrawal, they're either put off until they start making losses again, or email and phone contact

is terminated, i.e. everything is done but the money won't be paid out unless as a bait into higher

investments.49 One way to refuse payouts is the "don't ask, don't tell" trick: as long as the customer

doesn't state in any written form that he lives in a country where it's forbidden for his trading

partner to offer binary options transactions to consumers, transactions will be made with him. As

soon as he wants his money paid out, he must state his whereabouts and is accused of fraudulent

trading, because he was forbidden to accept the trader's offer from the very beginning. His money

will therefore be withheld as compensation.50

48 See Nikolova 2017c; cf. AMF 2017: 13

49 See Dahlkamp et al. 2020: 72-74

50 See Newman 2016

Illustration 12: "Don't ask, don't tell"-Ansatz (vgl. Newman 2016)


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In the second case, the personal data of the customers are collected and used for own purposes, for

example driving licence and credit card data, which are requested at the latest when the customer

inquires a payout. In this case, the trader charges the credit card, for example, without customer's

consent, but because the customer provided the data voluntarily, he won't be compensated by his

Illustration 13: AMF 2017: 13


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bank or credit card provider.51

In the third case, software is manipulated in such a way that the outcome of the bet is artificially

influenced, for example by a quotation system that works with a time delay, so that the advice given

by the consultant is always correct, which builds trust with the customer. As an example: The

customer opens a trader account for 250 Euro and bets on rising and falling prices (call/put binary

options). The trading platform provides him with a consultant as upgrade. The software is set up

with a time gap between the live price and system display, for example one hour, because the share

is traded in Portugal and the customer lives in Germany and isn't aware that British time applies in

Portugal. Alternatively, the trading platform could also transmit the live quotes with a time lag, or

the program could have a back door to manipulate prices just before the finish line:

„Let’s say 70 percent of the traders are for some reason betting that oil is going to go up. So

then the companies say, gee, if we make just 30 percent win, we’ll be able to keep a lot more

money. And the algorithm does that. It’s very easy to tell the customer, oh, the line fell a little

bit below your position. If the customer brings proof that the price of oil did actually go up to

where they predicted it would, the company will point them to the fine print, which states that

the company has its own algorithms which may differ from real-time.“52

In case of software manipulation, the trading platform definitely knows in advance how the bet will

develop, and telephone trading consultants at least gain more influence on the customer if they give

correct tips with knowledge of the betting outcome. They tell them when a bullish or bearish period

is about to come and how to react to it by counter bets to get back into the black. This allows you to

feed the customer until at some point the customer runs dry and doesn't add any more money. In the

end, they motivate him to bet in such a way that he crashes completely or they take care of it

directly by controlling his account themselves.53

The Swedish newspaper "Dagens Nyheter" wrote about this in a recent article about the Ukrainian

Milton Group:

“Soon their investments were multiplied, often without the victim understanding what was

going on. Through the remote control software quick loans with high interest rates – up to 39

percent – were taken out in their names. On a website they saw their money increasing at an

enormous rate. But when they wanted to withdraw the money it disappeared.”54

51 See Newman 2016

52 Weinglass 2016a

53 Cf. SEC Office of Education and Authorities 2013: 2f.; cf. Weinglass 2020b; cf. Weinglass 2016a

54 Carlsson 2020


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In August 2016, the Belgian Financial Markets Authority FSMA became the first EU country to

regulate the distribution of certain derivative financial instruments such as binary options, CFDS,

etc. The regulation came into force on 18 August 2016.55 It consists of two parts.

First, from a ban on distribution to consumers via electronic trading platforms of:

− Binary options;

− derivative contracts with a maturity of less than one hour; and

− leveraged derivative contracts, such as contracts for difference (CFDs) and rolling spot

foreign exchange contracts.

Secondly, it prohibits a number of aggressive or inappropriate sales techniques such as "cold

calling", inappropriate forms of remuneration, fictitious gifts or credits, etc., used in the distribution

of OTC products to consumers.56

Especially the bonus offers were quite a challenge: For example, if you accepted a bonus of five

thousand dollars, you had to wager twenty-five times the bonus value in binary options bets within

a given period of time. If you did that, it was almost one hundred percent for sure to lose your

investment, if you didn't, the small print would say that all funds in your account are frozen and

100% of the money was gone.57

Because of the coronavirus, the Republic of Ireland has introduced a two-week quarantine regime

for each arriving traveller. The message of the regulation is "Don't travel now, it's dangerous!" and it

was introduced to protect citizens. Nevertheless, Germans from Germany are constantly asking in

the Facebook group "Deutsche in Ireland" how they can circumvent the quarantine regulation.

Because many want to spend there their holidays despite the pandemic.

55 Cf. FSMA 2016: 3. When did the regulation enter into force?

56 Cf. FSMA 2016: 2. What is prohibited under the regulation?; see for this also ESMA 2016: 1f.

57 See Newman 2016

https://www.facebook.com/groups/DeutscheInIrland/


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The Binary Options FSMA Regulation applies only to so-called OTC instruments,58 which are

traded electronically and offered to Belgian residents. And therein lies one of the major problems:

each financial watchdog can only regulate what's offered to the citizens of its own country. What's

offered to foreign citizens from their own soil isn't regulated.59

The European Securities and Markets Authority ESMA also published an investor warning on its

website in 2016 against CFDs, binary options and other speculative products, after the number of

complaints from non-professional investors, who have suffered substantial losses when trading in

these products, had significantly increased. In addition, also the problem that these products are also

58 Cf. FSMA 2016: 2. What is prohibited under the regulation?; see for this also ESMA 2016: 1f

59 Cf. FSMA 2016: 6. Whom does the regulation apply to? Does it also apply to foreign providers?; cf. ibid. 7. Does

the prohibition apply to all forms of distribution of derivatives?

Illustration 14: Prohibition of Binary Options & CFD marketing in various countries (see ASIC 2019:

6)


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offered by unauthorised and unregulated traders, which further increases the risk of investor harm.60

In May 2018, ESMA decided to prohibit European brokers temporarily and completely from

offering and selling binary options to retail investors with effect from 2 July 2018.61

To loophole the Irish quarantine regime for travellers, you can fly to Belfast in the UK and take a

bus from there to Dublin, as there is an exception for travellers coming from Northern Ireland.

Similarly, binary options rules can be circumvented.62 And that people are interested in bypassing

the Binary Options ban is already indicated by the sheer quantity of Google search results within

0.55 seconds.

On 1 July 2019, ESMA announced that it wouldn't extend the temporary sales ban because most

national financial supervisory authorities in the EU countries have in the meantime taken permanent

measures against binary options, which is why ESMA steps back in its observer role for first.63 The

French AMF, for example, introduced the "Sapin 2 Law" on 9 December 2016,64 and the Central

Bank of Ireland enacted a similar regulation in mid-2019.65

60 Cf. ESMA 2016

61 Cf. ESMA 2018

62 See Daytrading.com 2020

63 Cf. ESMA 2019

64 Cf. AMF 2017: 4; cf. Nikolova 2017b

65 Cf. RTÉ 2019

I

llustration 15: Google.com, 27.07.2020


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Nevertheless, a uniform EU ban is better for many reasons. Firstly, it's easier to monitor what

advice brokers and their "education sites"66 give to consumers, because "Binary Options Ban" is an

international search term. And consumers will try to check it through search engines before they

circumvent something. With regulations on a national level, the search engine offer is smaller, if it

exists at all. And no verifiable data under simple search terms will strengthen call center fraudsters.

Secondly, EU regulations provide clarity regarding infringements that otherwise do not exist, for

example when traders from one EU country offer binary options to consumers from another EU

country - this way you can persuade people that EU law beats national law: at EU level it's allowed

because it's not forbidden, and therefore it's also allowed nationally because national law is

subordinate to EU law.

Many consumers would buy this explanation. A uniform EU ban is therefore preferable to all

national regulations because of greater clarity.

3. Binary options fraud victims feel helpless; stronger prosecution by the authorities is needed.

For the vast majority of victims worldwide, the impact of boiler room fraud and binary options

fraud on their financial situation is devastating. Many lose their lifetime savings, others are forced

to sell their lifelong dream of an own house, and some become so desperate that they commit

suicide.67

The feedback from the national supervisory authorities is often suboptimal in the context of seeking

support to compensate the financial losses of victims and in prosecuting companies for their illegal

activities. This is because those who appeal to the national financial supervisory authorities are

passed over, while law enforcement agencies have the frustrating feeling that their investigation

reports fall on deaf ears at higher levels. This is sometimes due to the very limited ability of

national supervisors to provide assistance, because their authority ends at the national border and

criminal traders are often not based in the same country as their victims. Or the company isn't

properly registered with the authorities in the country where it's allegedly based. In both cases, there

66 cf. Nikolova 2017b

67 See Weinglass 2017a; cf. Nikolova 2017b


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is no regular supervision by the relevant national financial authority, which prevents victims from

making claims based on national compensation legislation, as this applies only to legally registered

companies.

For this reason, victims seeking help are often encouraged by the Financial Authorities to report to

the local prosecution authorities, which often gives victims the impression that the law cannot

sufficiently enforce itself against companies that are obviously operating fraudulently from the

victims' point of view. The unfortunate fact that the people behind mass online scams, such as those

involving binary options, are rarely caught, has much to do with the international scope that such an

investigation requires, for which there are insufficient resources. To make matters worse, the use of

fake IDs and addresses is commonplace. Another problem is that many victims don't report the

crime, many because they feel embarrassed and ashamed that they have fallen for an offer that was

sometimes obviously too good to be true. Others don't even notice that they have been cheated, but

believe that they have lost and leave the issue on their own. The criminals profit from both

considerably without having to fear many consequences.

In April 2020, the Financial Mail on Sunday published an article by journalist Tony Hetherington, in

which he described how the UK's Financial Conduct Authority (FCA) isn't doing enough to inform

banks and third parties about the numerous complaints they have about allegedly dubious brokers,

fraudulent websites and their bank accounts. Hetherington writes that he fails to understand that six

weeks after the FCA posted warnings on the Internet, the malicious websites are still active and that

phone numbers and email addresses remain unblocked even though banks and other service

providers were capable of doing so. Hetherington concluded from this that the warnings on the

FCA's website are virtually useless unless action is taken by anyone.68

4. Recent legal actions against binary options scams related to Israel

4.1 Israel

Unlike most of the rest of the world, the Israeli binary options industry hasn't emerged from the

ranks of blue chip or investment companies. They were spin offs of the Israeli gaming and sports

68 Cf. Hetherington 2020


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betting industry and aimed to bypass the Israeli ban on gambling. They didn't recruit their personnel

from the financial sector, but from the ranks of affiliate marketing and the many immigrants who

came to the Holy Land primarily only with foreign language skills.69

Life in Israel is very expensive, while at the same time there is a lack of qualified work. For many

immigrants, the only choice is either to pick oranges for the minimum wage or to find well-paid

work in the financial betting industry thanks to their foreign language skills. This is one of the

reasons why the Israeli judiciary hasn't done anything against binary options Made in Israel for a

long time, although the problems associated with them were well known.70

In the meantime, however, disaster struck the Israeli binary options industry: first, an Israeli binary

options trader picked up, of all people, the chief investigator of the Canadian Financial Supervisory

Authority on the phone and demonstrated to him, how binary options fraud works.71 Shortly

afterwards, one of Toronto's most popular citizens killed himself because his existence was ruined

by binary options fraud.72

Internally stirred up by the reporting of Israeli journalist Simona Weinglass and externally by

pressure from third parties such as the Canadian government and International Organization of

Securities Commissions (IOSCO), the Israeli Parliament Knesset unanimously passed a law in

October 2017 making it the second country in the world after Canada to ban binary options

transactions in principle. The reason given was that binary options are fraud and damage the

reputation of the state from whose soil they're offered. In future, anyone who does business with

them risks up to two years' imprisonment.73

„To act against Israeli companies that were allegedly fleecing foreign customers, the securities

authority needed its enforcement powers expanded. It drafted the bill and persuaded the

government to back it, and got the tax authority on board as well, so that the bill could define

marketing binary options as a source offense under money laundering laws.“74

As a result, many binary options firms have switched to Forex products and cryptocurrencies or

have left the country, for example to Bulgaria, Cyprus, Albania or Ukraine.75 Others have simply

69 Cf. Saks 2016

70 Cf. Weinglass 2016

71 Cf. Weinglass/Horovitz 2016

72 Cf. Weinglass 2017a

73 Cf. Reuters 2017; cf. Tomer 2017; cf. TOI Staff 2017

74 Tomer 2017

75 Cf. OCCRP 2020: Policing a global boiler room; see also TOI Staff 2017


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continued to do so despite the new laws. Binary Options software giant SpotOption officially went

bankrupt in 2019.76

There haven't been any criminal convictions yet in Israel,77 but Israeli civil courts have now

responded, where a judge recently described the investment transactions of the Israeli online

investment website www.B4Binary.com as systematic fraud and granted almost $600,000 in

damages to plaintiff victims from abroad.78 Judge Ron Sokol wrote in his verdict:

„I am persuaded that all of the defendant’s activity in establishing the companies and

structuring the trades was intended to deceive investors, including the plaintiffs,” the judge

wrote. „There is no doubt in my mind that the defendant’s behavior fulfills all the fundamental

criteria of fraud.“79

According to Weinglass, dozens of civil lawsuits of alleged victims are currently going through

Israeli courts. However, most of these cases will eventually be solved through a settlement in which

the plaintiffs receive some or all of the money they claim, often in exchange for withdrawing their

lawsuit and signing a non-disclosure agreement. Nimrod Assif, an Israeli lawyer who is suing

several Israeli binary options companies on behalf of alleged victims from abroad, said in a Times

of Israel article that he is encouraged by the ruling in the B4binary case:

„The court understood that the practices of the binary options operation in question —

including the solicitation tactics, the evasive responses to withdrawal requests, and the use of

offshore companies to conceal the identity of the perpetrators — were nothing but fraud.

Anyone who knows anything about this industry can tell that these practices were common

among many binary options operations in Israel.“80

4.2 USA

4.2.1 Bloombex Options und Partnerfirmen vor Gericht

The United States Securities and Exchange Commission (SEC) has initiated several ongoing

lawsuits against binary options companies and their management. For example, in a press release in

September 2019, the SEC announced that it accused the three foreigners Gil Beserglik, Raz

76 Cf. Tomer 2017; vgl. Weinglass/Wootliff 2019

77 Siehe Weinglass 2019a

78 Cf.. Weinglass 2020b

79 Weinglass 2020b

80 cf. Weinglass 2020b


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Beserglik and Kai Christian Petersen of deceiving US investors, including pensioners, and causing

them losses in the double-digit millions through fraudulent online sales of risky binary options.

According to the SEC complaint, the fraud was carried out by three binary options online brokers:

Bloombex Options, Morton Finance and Starling Capital. All lured their victims by promising easy

and quick profits. This was done using "boiler room" call centers in Israel and Germany, which used

aggressive selling techniques to push customers to make large investments.81 The investor damage

caused by the three companies amounts to nearly one hundred million US dollars.

„According to the complaint, conversion agents in the call centers typically made up to 200

calls a day, reached 30-60 customers and got three to eight people to deposit daily. Call center

employees allegedly lied about their names, location, titles, experience, and the fact that they

made money when the client lost money. At their height, the three call centers employed 200

people altogether, the complaint claims.“82

4.2.2 Verdict against CEO of Yukom Communications

Also in 2019, the 38-year-old Israeli Lee Elbaz was convicted by a US district court in Maryland as

the driving force behind a binary options fraud. Elbaz was found guilty of conspiracy to commit

wire transfer fraud in one case and guilty of wire transfer fraud in three cases. The decisive point for

the prosecution was that the Yukom traders of their websites BinaryBook and BigOption not only

concealed from their customers the fact that they make profits from their losses, but also pretended

to represent investor interests.83 It was possible to prove this because five also accused Yukom

employees made deals with the authorities and testified against their former boss.84

Elbaz was arrested immediately after landing at the JFK airport in New York in September 2017.85

According to the Israeli trader online magazine Finance Magnate, since then the fear has been

spreading in the Israeli trader industry that anyone who's involved in business with binary options

or cryptocurrencies and travelling abroad could be arrested.86 The Ukrainian Milton Group has

therefore instructed its employees to avoid contacting customers from Israel, Belgium, the USA and

81 cf. SEC 2019

82 Weinglass 2019a

83 Cf. U.S. Department of Justice 2019

84 The 31-year-old Lissa Mel worked as a senior agent in a Yukom call center and was sentenced to twelve months

imprisonment and three hundred thousand US dollars in damages (see Abdel-Qader 2019; see Cortellessa/Weinglass

2019).

85 See Cortellessa/Weinglass 2019



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Ukraine.87

„Elbaz, who proudly called herself a “money-making machine,” trained employees to lie to

investors and rigged the odds against them, while falsely guaranteeing returns of up to 40

percent.“88 Like the Milton Group in 2020,89 the Yukom scammers targeted senior citizens,

pensioners, veterans and welfare recipients.90 They caused investor losses of 145 million US

dollars.91

4.3 Canada

In October 2017, Canada became the first country in the world to ban all transactions relating to

binary options in general if the expiry period is less than 30 days.92 „Our goal is to make every

Canadian aware of binary options fraud and make it a toxic word here. When people hear the term

they will immediately know it’s more than likely a scam and that they should contact us,” said Jason

Roy, chairman of Canada’s Binary Options Task Force and a senior investigator with the Manitoba

Securities Commission.93

In May 2020, the Canadian Ontario Securities Commission filed a civil suit against three brothers

with Canadian-Israeli dual citizenship for recruiting illegal Ontario residents to trade binary options

and defrauding them of $1.4 million.94 The Commission filed a civil suit against Joshua Cartu,

Jonathan Cartu and David Cartu alleging that the brothers and their companies engaged in the

illegal distribution and unregistered trading of securities from July 2013 to April 2017 by soliciting

deposits from Ontario investors and opening and operating trading accounts for Ontario-based

clients through their online trading platforms www.beeoptions.com and

www.glenridgecapital.com.95 The defendants also operated an Israeli call center under the name

Tracy PAI Management Limited (Tracy PAI), which was responsible for selling their binary options

87 Cf. OCCRP 2020: Policing a global boiler room

88 Abdel-Qader 2020

89 See Carlsson 2020; cf. OCCRP 2020

90 Cf. Weinglass 2018

91 Cf. Weinglass 2019a; cf. Abdel-Qader 2020

92 Cf. TOI Staff 2017; cf. Martin 2017

93 TOI Staff 2017


95 Cf. Morzaria 2020: 1-4

https://ca.linkedin.com/in/jason-roy-a84aba1a5

https://ca.linkedin.com/in/jason-roy-a84aba1a5

http://www.beeoptions.com/

http://www.glenridgecapital.com/


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by telephone. As usual, the customers were deceived about the location of their contacts and got

promised profits of 60-85 percent.96

The accused brothers also set up two companies as intermediary payment service providers and

concealed from their customers the fact that they were the owners by appointing fictitious directors.

The accounts of these two companies - UKTVM Ltd. and Greymountain Management Ltd. -

received a total of 233 million dollars in deposits from customers around the world between 2013

and 2017.97 In 2017, Greymountain declared bankruptcy and was itself covered by lawsuits because

the Irish puppet directors were also engaged in binary options transactions on their own, allegedly

cheating customers out of at least 4.1 million euros.98

The brothers themselves are considered in Israel as persons of public interest. Josh Cartu, for

example, has one million followers on Instagram and has dated the ex-girlfriend of Prime Minister

Netanyahu's son's ex-girlfriend in 2018.99

4.4 EUROJUST arrests in Europe

In July 2019, it became known that the German and Austrian police had conducted an international

criminal investigation of suspected online financial fraudsters. They investigated ten suspects in

connection with five allegedly fraudulent online trading websites. The police carried out raids on

call centres, offices and apartments in Kosovo, Germany, Austria and the Czech Republic. The five

trading sites are Option888, TradeInvest90, XMarkets, ZoomTrader and TradoVest.

According to the German report, operators of the five websites could have been responsible for up

to 400 fraudulent websites.100 In this context, Simona Weinglass is convinced that most of the five

websites are linked to Tradologic, an online trading platform provider established and operated by

Israelis and based in Bulgaria.101

96 Cf. Morzaria 2020: 5f

97 Cf. Morzaria 2020: 7f.

98 Cf. O'Faolain 2018; vgl. The Irish Times 2019; vgl. hierzu O'Faolain 2020


100 Cf. Deker et al. 2019



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In April 2020, raids were carried out on three other Tradologic websites. Ten suspects were arrested

in Serbia and Bulgaria who were connected to the trading websites XTraderFX, SafeMarkets,

OptionStarsGlobal, Cryptopoint, GoldenMarkets, Trade Capital, Fibonetix, Nobel Trade and

Forbslab.102 „German police said they were all “top brokers” who were especially skilled at

allegedly stealing large sums of money.“103 In total, the gangs supposedly got away with more than

a hundred million euros.104 The average damage was 40,000 euros per investor.105

According to ongoing investigations, criminals have enticed thousands of victims from several

countries to invest in non-existent financial products. Across Europe, banner ads and mass e-mails

promising above-average returns have been used to lure investors to register on unlicensed online

trading platforms and deposit 250 euros as seed money. Customers were then contacted by alleged

agents or brokers from call centres, who announced the possibility of even higher profits and

tempted victims to transfer more money to various accounts or have additional amounts debited

from their credit cards. Subsequently, the perpetrators simulated the alleged trade in financial

products and deceived the victims with fake positive results that were displayed on their online

trading platforms. In reality, no actual trade took place. Instead, the money was distributed to a large

number of participants in a complex money laundering network throughout Europe. The companies

102 Cf. Ritzer 2020; cf. van Lierop 2020; cf. Weinglass 2020c

103 Weinglass 2020c

104 Cf. Ritzer 2020; cf. van Lierop 2020; cf. Weinglass 2020c


Illustration 16: https://www.binaryoptions.co.uk/tradologic


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at the end of this chain were under the control of the criminals and allowed them to withdraw the

money for themselves. Thousands of investors suffered a total loss. It's unknown how many people

got affected, as many investors believe that they actually lost and therefore didn't turn to the

authorities.106

„The truth is that there is no investment or placement of options and no repayment or profit

distribution of investor funds. The deposited funds are never added to an investment, the

trading platform visible to the customer as well as the alleged customer account are pure

deception,” the German police press release concluded.”107

According to the website FinTelegram, the raids were related to the cyber crime organisation E&G

Bulgaria of the Israeli Gal Barak and his wife and accomplice Marina Barak (formerly Marina

Andreeva).108 In June 2019, the Bulgarian press already reported that Barak had commissioned

murders of former associates and the publisher of FinTelegram: „Gal Barak and his partners were

never squeamish in their choice of means. Bribery, threaths and assassination missions are

apparently part of the arsenal of this organization.“109

5. Private asset tracking and recovery companies related to Israel

5.1 Legal asset recovery firms

In recent years there has been an increase in the number of private investigation agencies

specialising in the search and recovery of assets and the assertion of civil law claims. This is

because many fraud victims feel that the authorities haven't done enough for them.

An Israeli asset recovery company that initiates legal proceedings on behalf of Binary Options fraud

victims is www.combatscam.com, a working group founded by Israeli lawyers Haggai Carmon and

Nimrod Assif. Their website is very professional and transparent about how binary options fraud

works. It also clearly explains why binary options investors almost always end up losing their

money. The law firm behind the website is Carmon & Carmon and has specialized in representing

the interests of American plaintiffs in Israeli civil litigation for more than thirty years.

106 Cf. van Lierop 2020

107 Weinglass 2020c

108 Vgl. Tamir 2019b

109 cf. Tamir 2019a

http://www.combatscam.com/about-us/

https://www.linkedin.com/in/haggai-carmon-435b47/

https://www.linkedin.com/in/nimrod-assif-13a8845/


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According to our opinion, www.combatscam.com is recommendable.

Another interesting asset recovery project is the European Funds Recovery Initiative (EFRI). EFRI

is a private initiative to recover funds for binary options, foreign exchange trading and

cryptocurrency fraud schemes. Its network of lawyers and law enforcement agencies covers a wide

range of jurisdictions and enables them to effectively prosecute fraudsters and recover investor

funds. In July 2020, EFRI is led by former Ernst & Young partner Elfriede Sixt and boardmember

Nigel Kimberly.

EFRI was recently registered in Austria as a foundation representing the interests of fraud victims.

It's called "Initiative to Combat Cybercrime against Consumers and Small Investors in Europe"

(EFRI European Funds Recovery Initiative). Its activities focus mainly on the following areas:

• Preventive education/information/training on the dangers of cybercrime for consumers;

• Coordination and contact point for authorities, non-government organisations and private

initiatives for data exchange and warnings regarding scams and investment fraud;

• Public early warning system against scammers and investment fraud in cooperation with

media partners and operators of social media;

• Development of a cybercrime database for statistical analysis;

• Ombudsman and contact point for victims of cybercrime and scams;

• Support for victims in recovering their losses.110

We believe that EFRI is evolving into a respectable organisation in the fight against (mass) online

(investment) fraud and in supporting fraud victims who are trying to get their money back from

fraudsters, banks and payment service providers (PSPs).

As of the end of June 2020, they represent 822 victims who were cheated out of 35 million euros.111

EFRI also has a very informative blog.

5.2 Suspected illegal asset recovery firms

Asset recovery is somehow an illogical business: you pay money to get back money you already

had. If you do it right, it's okay, because that's the day-to-day business of civil courts. But if you do

it with Binary Options Business Asset Recovery Companies, it means that you are offering them

110 See EFRI 2020: §2 Purpose

111 Cf. Sixt 2020

http://www.combatscam.com/

https://efri.io/about-us

https://www.linkedin.com/in/elfriede-sixt-05384719/?originalSubdomain=at

https://blog.efri.io/


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money to get money back from them that they already possess. The best outcome would be that you

pay ransom, the worst outcome would be that they keep both. Because these companies have no

interest in giving anything back.

As early as 2016, the United States Security and Exchange Commission (SEC) issued "Investor

Warnings", urging investors and fraud victims to think carefully before spending money on asset

recovery services that may prove to be fruitless. Many companies often charge a substantial fee for

providing such services. These fees depend on the amount of damage and can range from several

hundred to thousands of dollars.

In the meantime, fraudulent asset recovery has developed into a scam of its own, which Frans Roest

called "following up fraud", "boiler room fraud phase 2" and "advance fee fraud" in his global

boiler room fraud study published in 2018.112 The UK Financial Conduct Authority (FCA) calls

them "clone of claims management firms" if they imitate an existing recovery firm.113

It's important to note that some binary options firms are also active in the lucrative asset recovery

market. Our research into these scams revealed that certain specific asset recovery websites link to

the exact same address where fraudulent binary options providers are (or have been) located.

Calling fraudulent recovery companies by their names is actually pointless, because the names are

constantly changing. In addition, EFRI has published an extensive list of names of fraudulent

recovery companies. Nevertheless we want to introduce at least one suspected fake organization:

"FundsRecovery". Illustration 17

112 Cf. Roest 2017

113 See FCA 2020

https://efri.io/be-aware-of-recovery-scams-and-pls-avoid-them

https://funds-recovery.com/


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According to its website, FundsRecovery is an international company specialized in the recovery of

assets through fraudulent online activities. Their website is very professional and underlines their

global focus by offering four local hotline numbers for the USA, Israel, Sweden and Australia.

The only country in which they explicitly do not offer their service is the United Kingdom, where

they have been banned from trading.

Funds Recovery is writing: „We help you investigate, review and dispute the fraudulent

transactions. We find the liable entities including financial institutions, in order to claim lost or

stolen funds on your behalf.“114

Illustration 17 & 18: www.funds-recovery.com.

114 Source: https://funds-recovery.com/ viewed July 2020.

https://funds-recovery.com/


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According to its website, Funds Recovery is registered with the Israeli Ministry of Justice and is

licensed to offer customer advice on how to recover stolen funds.

The business model of the organization is based on a success fee, which is paid after the victim gets

his money back. However, they charge a fee for operating costs based on the specifics of each

individual case. According to its website, Funds Recovery is registered with the Israeli Ministry of

Justice and is licensed to offer customer advice on how to recover stolen funds.

At first glance this seems to be professional and trustworthy. However, Funds Recovery is

registered at 38 Ben Gurion Road in Ramat Gan, Israel, 5257354, an address that is virtually the

epicenter of the Israeli binary options fraud industry. Other recovery companies are also registered

at the same address. This is a clear warning sign for us - in addition to the FCA ban - and the first

screen is already talking about how to pay.

Another warning sign are the Trustpilot recommendations of the company: 54 of 54 are very

positive, which is extremely unusual. What is even more unusual, however, is that all the evaluators

generally only made one to three ratings. From a purely statistical point of view, there should be at

least a few experienced evaluators among them, who have made several dozen to a thousand

ratings. The FXReviews rating also sounds less like a rating and more like a sales pitch.

The other companies at the same address as Funds Recovery are "Money Back Ltd", founded in

2017, and "Pay Back Ltd". The latter is a company registered in Israel as LTD. 515711653. The

alleged purpose of Pay Back Ltd. is to help anyone who is a victim of online fraud. One of their

specialized services, according to information on their website, is "refunding stock trading fraud".

The FCA issued an investor warning about the pay-back website on 12 December 2019. According

to the British watchdog, Payback Limited isn't registered in the UK and uses instead the registration

number of a real company of the same name registered in the UK.115 A warning of the same content

was also issued by the FCA against funds-recovery clone www.funds-recovery.co.uk.116

115 Cf. FCA 2019

116 Cf. FCA 2020

https://www.trustpilot.com/review/funds-recovery.com?languages=en

https://fxreviews.best/funds-recovery-review/

https://money-back.com/

https://payback-ltd.com/

http://www.funds-recovery.co.uk/


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Illustration 19: https://beta.companieshouse.gov.uk/company/11401638

According to the British commercial registrar Companies House, the offshore company Payback

Limited was first registered on 6 June 2018. It's a small private company with a total nominal value

of GBP 10,000 and states property trading as its business purpose. However, although the company

is listed as "active", there is no website or telephone number.

This is also a clear warning sign for us.

6. Recommended fraud victim initiatives

In 2017, Frans Roest wrote in his global study:

„Despite recent efforts by authorities worldwide, a large number of boiler room fraud victims

feel helpless and lack the full support of national oversight institutions, law enforcement and

the justice department. Hence they organize their own crusades against the criminals whom

they suspect of swindling them. This is done through blogging, internet messaging, newspaper

articles, and through calls to action and requests for information in television programs.”117

Several websites and forums against fraud in general and investment fraud in particular can be

found on the Internet. Many of the operators of these websites and blogs have been victims of some

form of investment fraud or binary options and want to take action against the culprits. They also

want to warn other potential investors. Many of them are disillusioned victims who put a lot of

117 Roest 2017

https://beta.companieshouse.gov.uk/company/11401638


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energy into their "work" and have acquired a great deal of expertise, also in terms of the feelings

victims experience.

On the website www.investmenthoax.com, for example, you can read:

„NOTE! These criminals try to convince you that I am just another disappointed customer

trying to blame them for my losses in the market. Challenge me directly! I try to answer all

mails as soon as possible.“118

The „All About Scams“ sub site explains how these criminals operate.

On Facebook there is an action group called „Group Financial Fraud Victims International“. It's a

closed group, only members can see the discussions, concerns, cries for help and warnings about

alleged con men.

7. What to do?

7.1 What can cheated investors do?

To the deceived investors we would say: "Try not be deluded again!"

Don't let the alleged investment or recovery companies make you a victim once again and don't

throw even more cash after the money you burned. Fraud is based on hope and the misbelief that

spending a few more Euros won't make the roast fat anymore. A whole industry has been living on

it.

Accept your losses and go to the authorities. Don't act alone, but seek contact with other victims.

This will also help you to tell your relatives about the damage. Because you are part of the rule and

no exception.

Before investing, check these companies with due diligence and pay attention to warnings published

on the official websites of national financial authorities and supervisors. And do not respond to tips

"off the record". Because even if it were true, it would be illegal - proper investment doesn't work

that way. This is a clear warning sign that someone only wants to get access to your money and is

trying to trap you so that you feel complicit and don't press charges.

118 Source: www.investmenthoax.com

http://www.investmenthoax.com/

https://www.investmenthoax.com/

https://www.facebook.com/groups/102239743981274/

http://www.investmenthoax.com/


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Try to initiate chargeback procedures with your bank and file a complaint with your national

watchdog and report to the local police.

7.2 What can police do?

Don't blame the victim! Online fraudsters' websites today look so professional that even smart and

educated consumers can be fooled by them. At the same time, the scams are becoming more and

more psychologically sophisticated and bring ordinary people into a kind of dependency that makes

them to act strangely for themselves. Fraud investigator Jason Roy writes about this:

“People don’t get involved with a criminal company and the next day call us. It’s usually six

months later or eight months later. Often the scam being run is not ‘Let’s get the first amount

of money and stop talking to him.’ It’s an ongoing pitch to get as much as they can and

sometimes that lasts six months or more before the investor realizes that they keep asking for

money and every time he asks to take money out they ignore him. At some point they have a

moment of realization and they say, ‘Oh no,’ and that’s when they call us.”119

The police must take this into consideration and deal seriously with every allegation. People feel

bad enough as it is and should be motivated to file charges.

The compilation of these reports serves as an indicator of the extent of fraud and can be used to

determine analytically the extent of the financial damage caused. In this way, it's possible to

coordinate better the reactions of law enforcement authorities in terms of their investigative

capacity and availability. At the same time, it's easier to gain public interest in the issue and - as

Simona Weinglass did - to exert social pressure on fraudsters.

7.3 What can financial watchdogs do?

To the financial regulators, we would say: don't sit back and do nothing after you have published

details of a fraudulent company. Instead, contact financial institutions and similar payment service

providers regularly with a blacklist of unregistered brokers and companies about which complaints

and fraud reports have been received. Tighten the regulations so that it becomes mandatory for

banks and other financial institutions not only to follow the fraud warnings of the watchdogs, but

119 TOI Staff 2017

https://www.linkedin.com/search/results/all/?keywords=simona%20weinglass&origin=GLOBAL_SEARCH_HEADER


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also to implement them through their Know Your Customer (KYC) policies and incorporate them

into their customer list. Local authorities must pass on the warnings they publish to IOSCO and

watchdogs in other countries, as fraud is a cross-border business.

Prepare a bill such as the Israel Securities Authority ISA, which makes trading in Binary Options a

criminal offence. Because just because the law is lax there, it doesn't mean it will be the same for

you. The ISA solution shows the right way.

7.4 What can financial institutions and payment service providers do?

Financial institutions and asset management platforms (PSPs) may terminate client relationships

with business clients on the basis of their terms and conditions as soon as it's evident that these are

being violated. They may terminate the banking relationship, freeze accounts where appropriate and

submit mandatory reports to the national Financial Intelligence Units (FIUs) on suspicion of fraud

and money laundering.

If this is not done for any other reason than proven negligence, the financial institutions will be

liable themselves and risk being punished for non-compliance with anti-money laundering rules and

aiding and abetting criminal organisations. In addition, they may subsequently be held liable in a

civil court for providing inadequate KYC supervision and ignoring red flags. Recovery and class

actions in Ponzi fraud cases in the United States are examples of how these matters could be dealt

with.

7.5 What can website hosting companies and internet providers do?

Website hosting companies, Internet service providers and search engines can remove fake

messages and fake advertising, they can blacklist sites and remove them from search results based

on their own terms and conditions. They can also immediately terminate contractual relationships

with fraudulent companies.

http://www.isa.gov.il/sites/isaeng/Pages/default.aspx


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7.6 What can telecommunication companies do?

Telephone companies and other communications providers may block the telephone numbers of

business customers on the basis of their own terms and conditions and terminate the business

relationship immediately if the customer violates the agreement. (Including unlawful and fraudulent

practices.) In addition, they may submit mandatory reports of suspected fraud and money

laundering to the appropriate Communications Committee.

7.7 What can binary options software operators do?

As we saw in the beginning, the binary options industry claims to have created the perfect financial

game. Thus, no one but the "honest" binary options providers usually have a greater interest in

making their industry fraud-free.

Most Binary Options traders operate with the same software that is provided to them along with

extensive services. The binary options trading sites only build their own façade around these

purchased engines. The software providers are called "white label brokers", the trading operators

"black label brokers".120

The binary options-Big3 are: TradoLogic, SpotOption and TechFinancials. All three were or are still

located in Israel.121 Their software is used by at least ninety percent of all binary options trading

sites.122 Next to this, MetaTrader4 and MetaTrader5 are also important platform providers.123

Independent engine sites include IQ Option and Binary.com.

The structure of a trading page can usually be easily assigned to its engine provider. TechFinancial

sites offer for example High-Yield Options, Long-Term Options, Boundary Options, Early Closure

and Yahoo News Feed.124 Spot Option pages have particularly large buy and sell buttons - a green

one to invest in rising prices and a red one to invest in falling prices. They also offer an indicator

calculator that shows what percentage of other traders have recently invested in rising or falling

120 Cf. binaryoptions.co.uk o.D. B

121 Cf. binaryoptions.co.uk o.D. C; vgl. binaryoptions.co.uk o.D. B

122 Cf. binaryoptions.co.uk o.D. A

123 Cf. Saks 2016

124 Cf. binaryoptions.co.uk o.D. A

https://www.binaryoptions.co.uk/tradologic

https://www.binaryoptions.co.uk/spotoption

https://www.binaryoptions.co.uk/techfinancials

https://www.metatrader4.com/

https://www.metatrader5.com/

https://www.binaryoptions.co.uk/iq-option

https://www.binaryoptions.co.uk/binary-com


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prices.125

Binary options software providers should therefore cooperate with foreign financial supervisory

authorities and block software access to the websites concerned in the event of incoming warnings.

Without an engine, binary options fraud can't work.

By the way, this suggestion doesn't come from us: Spot Option founder Pini Peter himself suggested

125 Cf. binaryoptions.co.uk o.D. C

Il

lustration 17: https://www.binaryoptions.co.uk/spotoption


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it.126 And that's why you should take the Binary Options godfather at his word and put the cheaters

on a leash.

8. Biography

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https://checkit.wien/media/Speed_2017_final.pdf

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