Regulator: 'Our goal is to make it a toxic word here'

Canada passes complete binary options ban, urges Israel to follow suit

Despite Canadian efforts to curb the industry as well as a proposed Israeli law to outlaw it, the number of complaints of binary options fraud in Canada has not dropped

The Canadian parliament building  in Ottawa, Canada (MarcBruxelle/iStock)
The Canadian parliament building in Ottawa, Canada (MarcBruxelle/iStock)

The Canadian Securities Administrators, the umbrella group for provincial securities regulators, has announced a complete ban on advertising or selling binary options to Canadians. The ban, announced Thursday, defines a binary option as a financial instrument that is “based on the outcome of a yes/no proposition” and that pays out depending on whether the price of a particular asset goes up or down within a given time period. The ban will apply to binary options whose expiry period is shorter than 30 days.

Binary options is a largely fraudulent Israel-based industry that is estimated to bring in $5 billion-$10 billion a year. Fraudulent Israeli binary options companies ostensibly offer customers worldwide a potentially profitable short-term investment. But in reality — through rigged trading platforms, refusal to pay out, and other ruses — these companies fleece the vast majority of customers of most or all of their money. The fraudulent salespeople routinely conceal where they are located, misrepresent what they are selling, and use false identities.

Jason Roy, chairman of Canada’s Binary Options Task Force and a senior investigator with the Manitoba Securities Commission, told The Times of Israel in an interview shortly after the ban was announced that websites offering binary options without a license were already illegal in Canada but that the newly enacted ban sends an even stronger message.

Jason Roy, senior fraud investigator at the Manitoba Securities Commission (Courtesy)

“Previously we would say there is no one registered in Canada to offer binary options. We thought that by [now] banning this product [outright] we would say not only is no one registered here to do this, but no one will ever be registered here to do this.”

Roy said the number of Canadians who have come forward in 2017 claiming to be victims of binary options fraud is on track to be about the same as in 2016, in spite of, or perhaps because of, Canada’s efforts to warn consumers.

“It looks like our numbers will be similar to last year — more than 800 complaints, and we’re at a similar pace for 2017. We had a big initiative in March of 2017 where we created the website We received over 10,000 visits in that month and there were more than 500 news stories written about it. We’re hoping there’s a drop in the numbers of Canadians actually being victimized, but because the word is out we may have more victims coming forward.”

Another possible reason that the number of complaints has remained steady in spite of the media attention and regulatory crackdowns is because, Roy said, there is a “lag time” between the moment someone becomes involved with an online broker to the time they come forward to complain of fraud.

“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.”

Roy said Canada hopes to achieve three goals with the ban: warning investors, and persuading both credit card and technology companies to crack down.

“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.”

He adds that the ban helps in Canada’s ongoing dialogue with credit card companies and banks to help stop the flow of money offshore, as well as with technology companies like Google and Facebook to stop advertising such products.

“We have been in contact with both major credit card companies in North America. They’re blocking certain companies at our request as well as identifying companies that are selling binary options and banning them from their credit card network.”

Roy said Twitter is the first big technology company to ban binary options ads and he hopes others will follow suit. On August 30, Twitter updated its advertising guidelines to ban “ads making misleading or deceptive claims, such as ‘get rich quick’ offers and binary options schemes.”

Ultimately, the goal is to make binary options company leave Canadians alone.

“We hope we’ll be able to protect Canadians by shutting off these various advertising and payments avenues or significantly increase the cost to acquire a Canadian victim. We hope the cost will go up so high that it won’t be worth it for them; they’ll have to focus their efforts elsewhere.”

From binary options to cryptocurrencies

Despite the fact that the number of complaints regarding binary options has held steady, Roy said he has noticed a shift in the type of products these same companies, many of them operating from Israel, are advertsing. In recent months, Roy has seen binary options companies switching to products like forex, CFDs and cryptocurrency trading.

“We heard from a family who lost $180,000 to a company called WMOption. They noticed on their account statements this spring that the company had changed its name to PrimeCFDs. It looks like this particular company changed their product from binary options to CFDs.”

The late Fred Turbide, who took his own life after he was fleeced by an Israeli binary options firm, with his wife Maria Chaves-Turbide (Courtesy)

The Times of Israel has been exposing the widely fraudulent binary options industry since early 2016, beginning with a March 2016 article entitled “The wolves of Tel Aviv: Israel’s vast, amoral binary options scam exposed. Last December, Canadian businessman Fred Turbide died by suicide after losing most of his life’s savings to an Israeli binary options company called 23Traders.

A draft law introduced earlier this year to ban Israel’s entire binary options industry, as well as forex and CFD companies that operated from Israel without a license, was subsequently watered down to apply narrowly to binary options. Critics have charged that this creates a loophole and that, if and when the law is passed, fraudulent binary options companies can simply tweak the product they offer and continue to operate. This could explain the change in products.

An August 2, 2017 meeting of the Knesset Reforms Committee devoted to the topic of banning Israel’s binary options industry (Times of Israel)

Having passed a first reading in the Knesset, and then been approved by the Knesset Reforms Committee on August 7, the narrowed-down bill is awaiting its final approval in the Knesset. Tal Schneider reported in Globes on September 28 that despite the persistent urging of the Israel Securities Authority, MK Rachel Azaria and Finance Minister Moshe Kahlon, the cabinet secretariat has yet to schedule a date for Israel’s binary options ban to be brought before the Knesset plenary for a final vote.

Roy told The Times of Israel that now that Canada has passed a binary options ban, he hopes Israel will quickly follow suit and pass its own.

“A number of countries have been in touch with Israel and have expressed concern about the whole binary options industry there. That’s what led Israel to introduce this law. I am not sure why the law is stalled.”

Added Roy, “My hope is that Israel does the right thing. It looks like they were on track to do the right thing and I hope they do it.”

Roy also said that the Ontario Securities Commission and the Autorite des Marches Financiers of Quebec both have whistle-blower programs allowing those with knowledge of criminal binary options activity affecting Canadians to come forward and share information.

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