Menachem Begin Boulevard 52, like many of Tel Aviv’s skyscrapers, is home to not one, but several binary options companies. On a recent beautiful day, three hipsters are sitting in the plaza outside the building waiting for job interviews.
Asked if they are aware of binary options’ bad reputation, the three young people say yes; they already work in the field — in sales jobs for binary options firms.
“Look,” says a skinny 20-something with a pompadour haircut, “if you had a dream for the last 20 years, since childhood, and the only thing standing between you and realizing your dream was to work in this industry, wouldn’t you do it?”
“The vast majority of people in this country are in a daily struggle for their economic existence,” he adds. “I want something more than that.”
“When I talk on the phone to people,” interjects his tall bearded friend, referring to customers to whom he pitches, “I am always honest with them, I always tell them it is risky.”
The Times of Israel has been exposing and detailing Israel’s binary options and forex scams in a series of articles in recent weeks, beginning with an article entitled “The wolves of Tel Aviv.” Cumulatively, the Israeli binary options industry is estimated to turn over hundreds of millions of dollars a year, if not billions. A large portion of the firms in the industry engage in deceptive and fraudulent practices to ensure that their victims are fleeced of as much as possible — lying about their names and locations, allegedly rigging the trading platforms, refusing to allow customers to withdraw their money under any circumstances.
Five years ago, hundreds of thousands of Israelis, most of them young, took to the streets to protest the high cost of living and rising socioeconomic gaps in Israel, where disposable income inequality is the highest in the developed world. Although the situation has not greatly changed overall, a small portion of Israel’s young adults, several thousand in all, have found their personal solution to this economic reality by joining the growing forex and binary options industries.
While documenting the global fraud, with its hundreds of thousands of victims, The Times of Israel has had lengthy interactions with individuals who recently lost their life savings to Israeli binary options firms, including, for example, a 68-year-old British widow who described to us how she has been forced to sell her house and wished to commit suicide.
“What kind of people would do this to my mother?” the woman’s daughter asked. “My mother would plead with them that she had no money to pay her bills and they simply didn’t care.”
So, what makes a normal person from a normal background work in this industry? How has it become so mainstream that one student at the Interdisciplinary Center-Herzliya, an elite Israeli private college, estimated that 10 percent of her international classmates work in the field? How do thousands of young Israelis set out to find a job and end up “burning the money of widows, orphans and pensioners,” as the chairman of the Israel Securities Authority, Shmuel Hauser, recently put it.
One former employee, Jane, who worked in customer service for a Tel Aviv binary options firm, provided the beginning of an explanation: “Every day I would come to work and it would be story after story, email after desperate email of someone losing their life’s savings, and I couldn’t help them. I became desensitized.’”
Others we spoke to offered further elaboration and insight.
‘I did it for the money’
Nurit, a 30-something Tel Avivian with several friends in the industry, describes the transformation that took hold of her social circle several years ago.
“I remember a guy who was a few months behind on his rent and thought he would be evicted. Within months he went from being a loser to being able to buy the apartment. I have friends who, because they work in binary, live a dream lifestyle, who travel, who buy whatever they want, who pamper themselves.”
Michael, an 18-year-old immigrant from Europe who worked in binary options sales for the last eight months, says simply that “I took the job for the money.” He earned about 10,000 shekels a month, a sum that is not usually available to recent high school graduates.
“Not everyone in the field is a psychopath,” he insisted. “I think a small percentage are, the CEOs or the people at the top. I remember there was a client whose sister was in the hospital and she needed to pay her medical bills. My friend was pressuring the bosses to let her withdraw her funds, but they didn’t agree.”
Michael said that about 2% of traders made money with his firm. He now realizes he was scamming people, but says that at the time it didn’t register.
“In most of the interactions with the clients we make them laugh and they make us laugh, so you think of them as your friend and you actually trick yourself into thinking you’re doing something good for them.”
Asked if he could stand next to someone in real life and steal their wallet, Michael replied, “I think at this point I can look into someone’s eyes and sell to them. It’s not a problem. It’s like a second personality you assume.”
Kayla, a single mother, said she knew binary options was shady when she took the job at a regulated firm near Tel Aviv, but viewed it at is as a “temporary” solution to her financial struggles.
“When I first got there, they said that our job is to get people to deposit as much money as possible, and I thought, ‘okay, every bank wants customers to deposit.’ And then they said, ‘we don’t want customers to withdraw,’ and I thought, ‘okay, no bank wants customers to withdraw.’ But when they told us that our paycheck would be docked if there were any withdrawals, that’s when I thought ‘something’s not right.’”
Kayla recalls an atmosphere of booming background music and managers who constantly yelled at sales agents. When an agent got a deposit, the floor manager would stand on a chair and announce it and the room would burst into applause.
“They would tell us not to care about the clients too much, that you have to develop a thick skin. It felt awful to hear that,” she said.
But what made Kayla finally quit was an incident during Operation Protective Edge in 2014 when missiles were being launched at Tel Aviv from the Gaza Strip.
“The music was so loud that we couldn’t hear the air raid sirens. One day, my ‘red alert’ app went off so I went to the shelter by myself and when I came back my boss asked why I had left.”
Kayla quit a week later and moved back to the United States.
Sex, drugs and rock ‘n’ roll
At Michael’s firm, like at many others, the vast majority of employees were in their 20’s and single.
“There was a party atmosphere. I heard about some companies that offer cocaine. Outside of the job we would go to parties with only binary options people.”
Everyone in the industry had watched “The Wolf of Wall Street,” Michael explained, and was trying to emulate the characters in it.
“There were no prostitutes and no throwing dwarfs. But there was weed and alcohol.”
Women in the industry have said the salesforce is largely male. Jane, who worked for several binary options firms during her student years, described an atmosphere of constant, relentless sexual harassment.
“The guys in the office were constantly making sexual comments that I could overhear, discussing how they want to do you-know-what to me,” she said. “One time I was talking to a client and a guy I didn’t even know pulled me out of my chair and planted a big sloppy kiss on my cheek.”
Jane complained and the managers of her company spoke to the young man, but this made things even worse.
“He told all his buddies that I had complained and it just added fuel to the fire. I ate shit for every day that I worked there.”
Milgram experiment circa 2016?
Tamir, who worked as a computer programmer for a binary options firm in Herzliya, said the company didn’t come out and tell the staff that their business was fraudulent.
“I think they try to hide it from the employees, at least at first.”
But one day, the person in charge of educating traders took him under his wing and explained the system to him.
“He said the goal is to make them lose as much money as possible. He tried to justify it by saying that people are dumb and this is what they want.”
Tamir immediately decided to quit.
“I couldn’t stand the thought that all the money I was making there was at the expense of people losing everything they had.”
During his last few weeks, Tamir made it his mission to alert some of the company’s hundreds of employees to the fraud he had discovered.
“Many said, ‘you’re right,’ but they’re still there. The company has a lot of good and interesting people working for it. I think a lot of them know something is rotten but don’t want to know.”
Tamir compared himself and his former co-workers to the subjects in the famous 1960’s Milgram experiments on obedience to authority figures. In the experiment, a subject is told by an authority figure to administer electric shocks to a person in another room. Sixty-five percent of subjects administered the highest 450-volt shock when the experimenter, the authority figure, told them to continue, even though the person on the other end screamed and pleaded for mercy.
“As long as they get the legitimization of the company, most binary options employees don’t make the full connection between the discrete actions they take and the person on the other end,” Tamir said.
My mother cried
For Michael, the wake-up call came in a series of conversations with his parents.
“My parents asked me on the phone what I was doing. I said ‘I’m in sales.’ A day later they asked, ‘what kind of sales?’ I said, ‘finance.’ And then they said, ‘what do you actually do?’ I said, ‘binary options.’ Two days later my parents looked it up and found out what it is.’
Michael’s father would barely speak to him on Skype. His mother, asked “are you cheating people, are you taking actions that make them lose their money?”
“Yeah, basically,” Michael admitted.
Michael’s mother’s eyes filled with tears.
After that, she cried every day over Skype.
“I didn’t feel shame and I hadn’t really thought about what I was doing. But when I sat down and looked at it logically from all sides, I realized I shouldn’t be in this field because it’s bad. My mom cried on the phone for a month before I decided to get out.”