LIMASSOL, Cyprus — The first person I met at the IFX Expo, an annual summit for the binary options and forex industry held at the Palais des Sports in this industrial Mediterranean port, was a prim Russian woman in her thirties who had recently taken a job with a binary options company in Israel.

Over cappuccinos at a makeshift espresso bar on the floor of the converted sports arena where the conference was held late last month, we made small talk, discussing life in Israel, how expensive it was, and how Tel Aviv was more fun than Jerusalem. The woman was well-educated, she spoke excellent English, was polite and professional. But when she bade me goodbye and handed me her business card, something was off. It had her name, her company’s name, and a generic email address. But there was no phone number or physical location.

I had come to Cyprus on assignment for The Times of Israel, which has published a series of articles in recent weeks exposing fraudulent, Israel-based binary options and forex companies. IFX Expo is the binary options and forex industry’s annual confab. Held yearly in Cyprus, it drew about 800 attendees from around the world. My purpose was to gain an inside view of the industry and understand what makes it tick.

Over the course of the conference, I would experience other incongruous moments like the encounter with the woman with the incomplete business card. Early one morning, a beautiful woman clad all in white handed me a sleek-looking brochure that said “trade.Berry” on the cover. But when I asked, “What’s this?” she floated off as mysteriously as she had arrived, and opening the glossy leaflet revealed no more concrete information. “A platform with a FACE,” read the opening page, but nowhere could I find names of employees, contact information, or any indication of where the company is located.

‘The problem with binary options companies is that most people end up losing all their money,’ confessed a lightly goateed Russian researcher who worked for a payment-processing company

Binary options and forex are terms popularly used worldwide for financial products that are marketed to people as an investment. Both products can be, and are, offered by legitimate, highly regulated firms. However, fraud is widespread, notably in Israel, and among fraudulent companies, “investments” are actually a case of gambling in a rigged casino, set up to steal, as detailed in “The Wolves of Tel Aviv” and other Times of Israel articles.

Many of the fraudulent companies employ smooth-talking brokers, often pretending to be based in global financial capitals like New York or London, or claiming to have extensive investing experience, who then hard-sell clients around the world into putting their money on whether a certain commodity or currency will rise or fall over a very short period of time. In theory, if customers predict correctly, they win money, and if their prediction is wrong, they lose their deposit. In practice, fraudulent binary options and forex companies employ a variety of stratagems to ensure that all or almost all of their clients lose all or almost all of their money. Among the ruses employed, fraudulent firms misreport and manipulate an asset’s value, encourage clients to make bad trades, and refuse to respond when the client tries to withdraw his or her funds.

Presenting themselves to naive clients as responsible firms offering an opportunity to make money by trading in options on commodities, the fraudulent Israeli companies in this industry turn over hundreds of millions of dollars, perhaps even billions. Thousands of Israelis work in the field, defrauding customers worldwide out of hundreds of millions of dollars per year.

In the US, binary options dealing is limited to three regulated US exchanges, and it is illegal for binary options companies outside the country to approach US citizens. In countries including France and Canada, numerous Israeli firms appear on government blacklists, and investigators are attempting to run the Israeli fraudsters to ground, without much help from the Israeli authorities. In France and Romania, there has been a series of recent arrests, including of Israelis and Israeli-linked binary options fraud suspects. Israel recently banned Israel-based binary options firms from operating with Israeli clients, but they are still — scandalously — permitted to perpetrate their cynical theft among customers abroad. The Israel Securities Authority claims it does not have the authority to stop the firms stealing from foreigners; the police have shown no interest in tackling the snowballing scandal. And so it thrives.

Israelis had an outsize presence at the Cyprus shindig. They made up about 15 percent of conference attendees, and they figured prominently as speakers at the forum’s two dozen panels. An Israeli company, SpotOption, was given the center space on the expo floor, where it constructed a plush lounge with leather couches and chandeliers.

The conference floor at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

The conference floor at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

Other attendees and speakers came from the US, UK, Cyprus, Greece, Russia and former Soviet countries, Eastern Europe, Arab countries (a very small number of participants) and Southeast Asia, including China (perhaps a dozen). The majority of exhibitors seemed to be service providers to binary options companies rather than the binary companies themselves.

It was SpotOption — which produces the software on which binary options players “trade” — that invented the concept of binary options in the first place, about ten years ago, said a Lithuanian-born executive of a Cyprus-based forex firm.

An exhibitor geared toward the Arab market, at the IFX Expo conference at the Palais des Sports in Limassol, Cpyrus, May 2016 (Hunter Stuart)

An exhibitor geared toward the Arab market, at the IFX Expo conference at the Palais des Sports in Limassol, Cpyrus, May 2016 (Hunter Stuart)

Since then, he said, the Israeli industry has exploded. “There are probably 200 forex and binary companies in Israel. Every year you have a dozen new ones opening and then going out of business.”

Meanwhile, a Chinese man who works for a technology platform vouchsafed to me that “the forex and binary options industry is recession proof. When the economy goes downhill, even oil is affected, but not forex and binary options. People still want to find a way to earn money from home.”

The rapidly growing market in Asia is something I heard about again and again during the conference.

“In Asia, the region is really growing in appetite for forex trading,” Google executive Panos Lamprakos said in a presentation, while showing slides illustrating how the number of searches for “forex” and “binary options” in southeast Asia has skyrocketed in recent years.

The entrance to the IFX Expo conference at the Palais des Sports in Limassol, Cpyrus, May 2016 (Hunter Stuart)

The entrance to the IFX Expo conference at the Palais des Sports in Limassol, Cpyrus, May 2016 (Hunter Stuart)

I’d come to the event in Cyprus to see the industry up close. I knew how the fraudulent firms work, how salespeople, using fake names and lying about their expertise and where they are based, cajole clients into investing small sums of money, say $200, and let them win at first to give them confidence as they reel them in and fleece them. I’d read about victims in Eastern and Western Europe, Canada, Saudi Arabia, Egypt, Nigeria and India. I’d read about Daniel and Italia, a married couple in France who had saved 50,000 euro ($56,000) to retire with and dreamed of driving across Europe in a camping van with their savings, but wanted to invest some of it first. After researching online, they got a call from an investment broker at a company called Fxntrade. Fxntrade had a glossy website and a London address. The dealer repeatedly called them over a long period to rope them, little by little, into investing more and more money. Once they’d put the whole €50,000 into investments using Fxntrade’s program, Fxntrade disappeared without a trace. I’d read about elderly people forced to sell their homes when their life savings were stolen by binary options companies located in the Tel Aviv area, and about a young man in Pakistan who lost his entire deposit while he was saving for his wedding.

And at the forum, it became remarkably straightforward to square the horrific stories I’d read with the people I met, since several of them acknowledged exactly what was going on.

They call it ‘the kitchen’

I befriended an earnest young banker from Latvia, for example, clad in dark blue Levis, a sky-blue cotton blazer and Elvis Costello glasses. He spoke articulately of how many binary options companies lie about how the commodities on which their clients place bets actually perform in the market. “They call it ‘the kitchen,’ because the companies are just cooking up whatever they like” in terms of market performance, he said, adding that he worked in legitimate forex, in which the firm only earns money when the customer does.

“The problem with binary options companies is that most people end up losing all their money,” confessed a lightly goateed Russian researcher who works for a payment-processing company. (Payment processors typically help binary options firms avoid credit card “chargebacks” by indignant consumers.)

Models in Greek-themed costume greet conference attendees at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

Models in Greek-themed costume greet conference attendees at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

As a corporate model in a blue sequin gown with the words “no sex, just business” painted on her bare back served us flutes of chilled champagne, this researcher, who was no older than 25, went on to lambast the very industry that employs him. He told me how pushy binary options salespeople are: “As soon as you try to set up an account with one of them, they will call you and start asking you all kinds of questions in order to understand who you are.”

He complained about how much of the regulation for the industry is ineffective: “A lot of these companies, they want the Cyprus regulation, because the brand is good. But it’s not strict enough to stop them from doing unethical things,” he charged.

It was striking to hear industry employees speak so candidly. They seemed so normal, the kind of people that, if I forgot my wallet at one of their corporate booths, would promptly return it. And yet, while many of them were not the people directly plundering the bank accounts of widows in Canada and impoverished young men in Pakistan, they were making their money from an industry that, in substantial part, does precisely that, and drinking and dancing at its annual conference.

Open bar serving cocktails at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

Open bar serving cocktails at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

There was an open bar that began serving free cocktails around lunchtime each day. And there I met a self-described Polish businessman, a good conversationalist who spoke to me in fluent English about Jerusalem — where he said he had once lived, years ago — and also about journalism, since he had a nephew who was also a freelance reporter in the Middle East. When I turned the conversation around to his own line of work, he grew cagey. Seeing his nametag said “FXBull,” I asked where the company was located. He evaded the question and said only that he’d come to Limassol to set up a local branch for the firm. As I headed home the next day, I saw him at the airport, speaking Hebrew and waiting to board a flight to Tel Aviv.

At a party at a nightclub on the second night of the convention, sponsored by one of the bigger forex brokerage firms, things got rather weird. There was a 1920s theme: the men were wearing double-breasted suits and fedoras and the women were in flapper dresses and elbow-length gloves, smoking languidly from long cigarette holders. A mustachioed little person on hand was grabbed by people to pose in group photos, like a party prop. A cross-dressed entertainer, who performed an old-time song-and-dance routine on stage, was similarly pulled into group photos at random. When the live performance ended, the song “Gangsta’s Paradise” blasted through the stereo as fireworks burst and crackled overhead. “Power and the money, money and the power,” the song boomed, while Grey Goose got ordered by the bottle, people lined up for Jagermeister shots at the bar, and now and then a small cloud of cannabis smoke drifted upwards toward the chandeliers.

When I left the club at 1 a.m., I passed others who were just arriving. The next morning, the conference floor was largely deserted until almost lunchtime.

Hitting their quotas

As people started to filter in, I struck up a conversation with an employee of a Cyprus-based company that calls itself “Global Recruitment Solutions,” which offers staffing services for binary options and forex firms.

“What do you think about the media reports saying that salespeople are misleading and deceiving people, taking their money?” I asked gently. Her response was dismissive. “That’s the nature of sales, though, isn’t it?” she said. “They’ve got to hit their quotas.”

That was the theme, it became clear: Though almost everyone I met acknowledged that in one way or another, there were duplicitous practices in the binary options industry, to put it mildly, they all passed the buck.

Some chose the easy scapegoat of “over-aggressive salespeople,” who “used to sell cosmetics abroad.” Others protested their innocence on the grounds that they merely provided services to the industry, like software or marketing or facilitating payments, and therefore could not be held responsible if companies chose to break laws or act immorally.

Tammy Levy of Spotoption gives a "workshop" on effective platforms for binary options trading (Hunter Stuart)

Tammy Levy of Spotoption gives a ‘workshop’ on effective platforms for binary options trading (Hunter Stuart)

“SpotOption is a technology company, okay? Everyone is responsible for checking regulation in the jurisdiction where they want to work. I am here to tell you what options you have technologically,” said Tammy Levy, SpotOption’s director of marketing, during a Q&A session where she was asked about possible crackdowns by law enforcement.

And what of the large tech corporations who gave presentations at the expo: Google, Facebook and Twitter? All three companies delivered keynote addresses offering tips on how to use their platforms to acquire more customers and make more money.

Liset van Oosterhout from Twitter at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

Liset van Oosterhout from Twitter at the IFX Expo Cyprus conference, May 2016 (Hunter Stuart)

“We’ve worked very closely with the forex and binary industry over the last, I would say, six months,” said Liset van Oosterhout, an account executive for Twitter’s Israeli market, to a rapt audience. “We saw great results with a few of the advertisers, and it’s really a growing industry for us.”

When The Times of Israel contacted them, seeking to ask about their cooperation with an industry blighted by fraud, neither Facebook nor Twitter responded.

Google wrote back addressing the issue of how it ostensibly prevents binary options and forex marketers from gaming its search results, but did not address the issue of why it is helping to facilitate this industry at all.

“Google’s algorithms can detect the vast majority of spam and demote it automatically,” company spokesperson Paul Solomon claimed. “For the rest, we have teams who manually review sites for violations of our webmaster guidelines and take actions including removing sites from search results.” (In fact, unscrupulous binary options firms often dominate Google search results.)

As I left Cyprus to fly back to Israel, a question kept nagging at me. If the payment companies aren’t to blame, and the marketers aren’t to blame, and the aggressive salespeople are just meeting their quotas, luring in clients who think they are genuinely trading but who are in fact simply being milked, then who is really responsible for the fraud being carried out worldwide, much of it by companies based in Israel?

The answer most common among all the people I spoke to at the IFX Expo conference in Cyprus was summed up by that young Russian researcher who had acknowledged that almost everyone who “trades” in binary options loses all their money.

“The customer is to blame,” he told me with a straight face. “They know they’re making bad choices, but they keep doing it. I think they like to be abused.”

The Times of Israel invites people who have been defrauded by binary options, and people who have worked in the industry, to contact us. You can do so by email

Read more of The Times of Israel’s reporting on the binary options scandal