What happened to the multibillion-dollar binary options industry?
It is an industry that according to some estimates was generating as much as $10 billion annually only two years ago. The binary trading scam has been brought down to earth quickly; international regulators and authorities have started to recognize that what may look like a fast growing fintech industry, was in fact a global trading scam of monumental proportions.
The opportunity for corruption amongst binary options companies and platforms was brought about by the fact that, at least initially, there was no regulatory body to supervise their operations. The law is always playing catch up to the latest technology. In the decade it has taken to bring this industry under the radar of international regulators, the binary swindlers have siphoned off millions, if not billions, from unsuspecting victims from every corner of the world.
Never in the history of financial trading has an unregulated operation been able make (more accurately, take) so much money in such a short space of time. Indeed, it is not a stretch to say that the downfall was only brought about by the incredible greed of those pulling the strings behind the curtain.
2016: The Binary Trading Scam is Exposed to The Masses
Whoever says that investigative reporting is dead has not been following the fall from grace of the binary options industry. At its peak, the biggest brands in the sector were acting like publicly traded companies: lucrative sponsorship deals with some of the biggest European football clubs, including Juventus & Liverpool FC. But something didn’t add up and as the scam continued, the victims of this fraud began to mount up.
The rumors became more frequent and the details of the stories were hard to ignore. Simona Weinglass’s investigative reporting in the Times of Israel blew the lid off of this corrupt industry and made everyone stand up and take notice. The article went viral and set up the beginning of the end for the binary trading scam.
2017: The Year the Authorities Stood up to Binary Options Scammers
Banc de Binary (the sponsors of Liverpool FC) were by many estimates the biggest brand in the industry, so it only made sense that they were the first to take the heat. A series of consumer complaints led to an investigation which, in turn resulted in a multimillion dollar fine from the Securities & Exchange Commission, as well as permanently barring Banc de Binary from doing any business in the United States or with U.S. persons.
Banc de Binary was the first domino to fall and since then there has been multiple arrests and police raids on offices connected to unregulated binary operations in Israel, United Kingdom, Australia & the United States. In hindsight it took a while for the bubble to burst, with the key operators and brand executives acting with seeming immunity until the house of cards came crashing down in Autumn 2017 with the arrest of a high profile binary options CEO in New York. The unravelling of this fraudulent industry also led to the emergence of wealth recovery companies capable of recouping money from the scammers.
The arrest of the Israeli CEO and the Federal Bureau of Investigation (FBI) indictment that followed it is hard reading for anyone still connected to the industry. It even goes so far as to mention collaborative work done between the brands and platform providers to ensure client losses. This is deeply troubling.
The industry model is an oxymoron itself: you make money when your client loses, but you’re their advisor/investor/broker! All the sophisticated marketing and sales technique are there to cover up this fact and make sure the client doesn’t understand this most basic of business models. You lose = They Win.
Binary Trading Scam: What to expect in 2018
Regulation, law and enforcement. The curtain is closing on these unregulated operations and country by country the regulators are taking over. In Canada, all binary options trading (less than 30-day positions) are outlawed. The outright ban of binary options in its de-facto epicenter, Israel, as well as the recent changes in the UK to bring all binary options operations under the Financial Conduct Authority (FCA) is not only the right move, but one long overdue.
Looking forward there are some who believe the adage ‘scammers are always going to scam’; however, this is proving harder and harder for those involved in the binary trading scam, as international intelligence agencies in conjunction with law firms around the world are tracking these individuals down. The changes in the law have given independent agencies and law firms impetuous to act as they now know they have the law on their side.
Wealth Recovery International is one of these independent companies that is stepping in and recovering money for the victims of binary trading scams. Wealth Recovery International describes itself as an intelligence gathering agency, specializing in financial fraud, specifically binary options fraud. They work with a network of attorneys who take on cases confident of winning thanks to the intelligence that they provide.
As of writing, Wealth Recovery International have recovered over $5m USD for victims of binary options fraud. As with Banc de Binary, many of these larger binary options operations appear to separately incorporate the different elements of their business, specifically the trading and marketing departments.