TEL AVIV — With Moët champagne, Glenlivet single-malt whisky and Beluga vodka flowing, Israel’s top binary options firms partied Thursday night in a gratuitous show of opulence and excess, celebrating the staggering amounts of cash the companies manage to bring in, as victims scammed by the fraudulent industry worldwide continue to lose their money.
At the A-list Clara nightclub in Tel Aviv’s Dolphinarium, dozens of executives of leading binary options companies danced and drank the night away at an exclusive event held by the one of the industry’s top online marketers, ClickSure.
As the pumping music rang out across the Mediterranean bay that the dance floor opened up onto, it was DJ Khaled’s 2010 hit, “All I do is win,” that provided the theme music to the night, provoking a spontaneous sing-a-long as the merry traders raised their glasses and belted out the words.
“All I do is win win win no matter what. I got money on my mind, I can’t get enough,” boomed the ominous lyrics, seemingly shouting out the message to the world across the water.
But beneath the celebratory mood, in private conversions with this Times of Israel reporter, posing as an industry newcomer, the people running the multi-million dollar financial netherworld expressed a deep sense of worry that the party was about to end.
“It’s hard for everyone at the moment,” an affiliate manager of 24Option said, referring to intensifying moves by international regulators in France, Canada and the US to ban Israeli companies from operating in their countries and to track down fraudulent Israel-based traders and firms that are fleecing their citizens.
Last month the Autorité des Marchés Financiers (AMF), France’s securities authority, banned 24Option, a large firm with offices in Ramat Gan, from operating in France. The company, which is regulated in Cyprus under the name Rodeler Ltd. and operates from Israel under the name Betamedia, is now prohibited from soliciting customers on French territory.
The AMF said it reached this decision because Rodeler Limited had failed to provide accurate information to clients, had failed to act honestly and fairly, and had failed to act in the best interests of the French clients, causing them harm.
The move could damage 24Option to the tune of up to $2 million a month, the affiliate manager estimated, saying that the company had lost around 1,000 customers in France.
Another binary options employee whom The Times of Israel spoke to separately on Thursday evening was vague about her present workplace but said that in the past she had worked for Glenridge Capital. “The industry is scared shitless about the media exposure,” she said. “We feel like we’re living on borrowed time.”
‘In the end they will close us all down. But let’s enjoy it while it lasts. We will celebrate a few more of these parties before its over’
The Times of Israel has in recent months been detailing massive fraud by Israeli binary options firms, beginning in March with an article entitled “The Wolves of Tel Aviv.” The fraudulent firms purport to be guiding their customers in making lucrative short-term investments, but are in fact using various ruses, including allegedly manipulating rigged trading platforms, to simply steal their clients’ money.
There are more than 200 brands operating from Israel, employing thousands of Israelis, defrauding customers out of an estimated billions of dollars per year. While local binary options firms have now been banned by the Israel Securities Authority from targeting Israelis, they are still free to target people abroad.
“We’re everywhere,” said a marketing manager from Opteck, a company with large offices in Herzliya that has in the past been the subject of alerts and cautions by Canadian regulators. “Ukraine, Romania, France, Italy,” he listed, “and a small operation in Cyprus, you know, just for the regulation,” he added, referring to the financial oversight provided by the Cyprus Securities and Exchange Commission, or Cysec.
According to an AMF undercover investigation published in April 2015, the percentage of customers of Cyprus-regulated companies who lose most or all of their money approaches 100 percent. A spokesman for Cysec told The Times of Israel that since 2015 the regulator has stepped up its oversight of binary options companies and issued some $2.2 million in fines — a negligible sum given the vast revenues made by the companies.
As the night went on, oversized bottles of expensive spirits were periodically brought to the marijuana-scented dance floor accompanied by dancing girls waving sparklers in the air. Directing the drinks and the entertainment were the managers of ClickSure, the hosts of the event, keen to make sure their clients were having as enjoyable a night as money could buy.
ClickSure is an affiliate marketing network that helps drive traffic to binary options web sites. The way affiliate networks operate is that they provide leads for the companies through online advertising campaigns. In the case of binary options, these campaigns often tout get-rich-quick schemes through slick, well-produced videos. Viewers of the videos who are interested in finding out more leave their details and these “hot leads” are then sold to binary options brokers. A conversion agent at the brokerage picks up the phone, and if the lead converts — that is, deposits an initial $250 or so — the affiliate earns a fee.
One binary options executive explained the basic financial model: “We give Clicksure tens of thousands of dollars a month for the referrals they get us,” he said. “We get it back though, for sure. Everyone makes money in this business. They win. We win.”
A man presenting himself as the CEO of Clicksure struck up a conversation with this reporter in the bathroom. He said that he is based in South Africa and the majority of company’s staff operate from Nottingham in the United Kingdom.
But while the drinks continued to flow, just as the money still does, it was clear that some feared that rising media exposure and tougher regulation may cause both to dry up in the not-too-distant future.
“In the end they will close us all down,” said the 24Option affiliate manager, referring to the Israel Securities Authority.
“But let’s enjoy it while it lasts. We will celebrate a few more of these parties before it’s over,” he said, raising a slightly less sparkling-looking glass of Moët.