As Israeli authorities continue to turn a blind eye to the massive binary options scam operating from within its borders, the US and France have taken action against several Israel-based binary options firms, with French regulators describing the industry as “highly risky and very dangerous.”
Last week the Autorité des Marchés Financiers (AMF), France’s securities authority, banned 24Option, a large firm with offices in Ramat Gan, from operating in France. From Monday, the company, which is regulated in Cyprus under the name Rodeler Ltd. and operates from Israel under the name Betamedia, is prohibited from soliciting customers on French territory.
In a press release dated July 29, 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.
Based on the information it collected on 24Option, the AMF decided that trading with the company is “not in accordance with the balance of risk and opportunity,” Caroline Leau, a spokeswoman for French financial regulator, told The Times of Israel.
“They present themselves as an easy way to make money, but this is not a game. It’s a highly risky and very dangerous business,” she said.
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.
Local binary options firms have now been banned by the Israel Securities Authority from targeting Israelis, but they are still free to target people abroad. There are more than 200 brands operating from Israel defrauding customers out of an estimated billions of dollars per year.
Leau, who could not confirm the names of the owners of 24Option, said the AMF decision did not come about as a result of cooperation with Israeli authorities.
“This is a purely European decision based on European rules,” Leau said, explaining that European Union regulation allows member states to penalize companies regulated by securities authorities in other EU countries. 24Options is regulated by the Cyprus Securities and Exchange Commission, or Cysec. In this respect, “Israel is not concerned,” she added.
According to a recent AMF undercover investigation, close to 100 percent of the customers of Cyprus-regulated companies lose all their money. The findings, described in an April 2015 press briefing, show that overall the companies do not comply with Cysec regulations, and nor does Cyprus adequately enforce its regulations.
Meanwhile, on July 28, a US Federal Court ordered two Israel-based binary options firms, Vault Options Ltd. and Global Trader 365, to pay more than $4.5 million for illegally soliciting and defrauding US customers. The two firms will be charged a $3 million civil monetary penalty as well as $1.6 million in restitution to their defrauded customers.
The court found that not only did these two companies solicit US customers without a license, but deliberately defrauded customers out of at least $1.6 million in 22 states.
The companies promised customers that they could make large profits, when in fact the majority of customers of Vault and GT 365 lost most of their money, the court found. The companies also falsely told their customers that their funds were insured against losses, failed to respond to customers’ phone calls and emails, and ultimately stole their money.
The US Commodity Futures Trading Commission (CFTC) thanked the Israel Securities Authority (ISA) for assistance in investigating the two companies. A spokeswoman for the ISA, which controversially claims it lacks the authority to tackle fraud perpetrated by the firms here against victims abroad, said she could not elaborate on what assistance the ISA had provided.
Both the Vault Options and Global Trader 365 web sites have been taken down.
Many other Israel-based binary options companies continue to solicit Americans in contravention of US law, however. According to Andrew Saks-McLeod of the Finance Feeds trade publication, 20 of the 41 companies on the CFTC’s Red List are based in Israel.