Wikipedia vs. Banc De Binary: A 3-year battle against binary options ‘fake news’
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A Wikipedia editor describes one of the worst edit wars in its history

Wikipedia vs. Banc De Binary: A 3-year battle against binary options ‘fake news’

Binary options fraudsters employ experts to outwit Google, create laudatory news sites, engage on social media -- anything to encourage new victims and keep the truth from coming out. One key battlefield: The online encyclopedia

Simona Weinglass is an investigative reporter at The Times of Israel.

Banc De Binary CEO Oren Laurent in an interview posted on YouTube in August 2016 (YouTube screenshot)
Banc De Binary CEO Oren Laurent in an interview posted on YouTube in August 2016 (YouTube screenshot)

If you’re the strategist behind a multibillion dollar scam that rips off hundreds of thousands of people worldwide, one of the key challenges you face is managing your online reputation. How do you prevent defrauded clients from warning others about their appalling experiences?

This is the quandary faced by fraudsters in the binary options industry, which operates on the assumption that at some point potential clients will do a search for “Is binary options a good investment?” or “Is XYZ Binary Options Brand a reputable company?” To prevent the truth from getting out, the fraudulent firms need to comprehensively control what potential investor-victims see online.

The Times of Israel, in a series of articles, has exposed the largely fraudulent Israel-based industry that has been stealing billions of dollars from hundreds of thousands of victims worldwide for the past decade. Duplicitous binary options companies ostensibly offer customers 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 industry has been denounced by Israel’s securities regulator and by the Prime Minister’s Office, and a government-drafted, opposition-backed bill to ban it was sent in February to the Knesset, where it currently languishes.)

A screenshot of the February 2017 Signpost article detailing Wikipedia editors' battle with Banc de Binary.
A screenshot of the February 2017 Signpost article detailing Wikipedia editors’ battle with Banc de Binary.

For a normal business or industry it would be difficult to keep secret a track record of vast global theft. But the binary options industry is unrelenting in its ambition to control the flow of information about itself. Several months ago, an article appeared on Signpost, the internal publication of Wikipedia editors, showing the extreme lengths the boosters of just one binary options firm went to in order to bury information about the company’s troubles with regulators.

Entitled “Wolves nip at Wikipedia’s heels: A perspective on the cost of paid editing,” the article describes the exhausting battle waged by volunteer Wikipedia editors against apparent flacks for Banc De Binary, an Israeli binary options firm which, until it closed its doors several months ago, was considered a flagship of this industry.

An encyclopedia that assumes goodwill

In its aims and founding philosophy, Wikipedia is the antithesis of the fraudulent binary options industry mindset. Founded in 2001 by Jimmy Wales, the online encyclopedia grew out of the American open-source software movement, which rests on the assumption that people will collaborate on a project without being paid to do so, out of an altruistic desire to produce something of value that benefits all. Anyone can edit Wikipedia, and much of its success relies on strangers around the world upholding the community’s trust.

Due in large part to this optimistic view of human nature holding true, Wikipedia has been a success to the point where it is now the fifth-most visited website in the world. But this success has attracted many actors who seek not to enhance human understanding but to promote themselves, sometimes for illegitimate ends.

Wikipedia logo
Wikipedia logo

For instance, in a much-publicized 2013 incident, accounts allegedly belonging to employees of a company called Wiki-PR, which wrote Wikipedia articles and edited pages on behalf of large corporate clients, were blocked and removed from the site.

“It looks like a number of user accounts — perhaps as many as several hundred — may have been paid to write articles on Wikipedia promoting organizations or products, and have been violating numerous site policies and guidelines, including prohibitions against sockpuppetry and undisclosed conflicts of interest,” Wikimedia Foundation director Sue Gardner said in a statement on October 21, 2013.

But as the recent Signpost article makes clear, the problem of paid editing has not gone away. And some of the worst violators are retail forex and binary options companies, Smallbones, the author of the Signpost article and an editor at Wikipedia for the past 11 years, told The Times of Israel in a telephone interview. (The Times of Israel knows the identity of Smallbones, a retired professor of finance living in the United States, but he requested that his real name not be used here in an effort to minimize the harassment, both online and off, that he has experienced as a result of writing about the issue of paid editing.)

“We very commonly get people trying to insert advertisements into articles,” the Wikipedia editor said. “But this Banc De Binary article is by far the worst case I have ever seen.”

A screenshot from a 2013 promotional video for Banc de Binary, since removed from the internet (Youtube)
A screenshot from a 2013 promotional video for Banc de Binary, since removed from the internet (Youtube)

 

Banc de Binary’s website first appeared online in about 2010. In the same year, a man by the name of Oren Shabat registered the Israeli firm E.T. Binary Options Ltd., an Israeli company that operated a call center and managed Banc de Binary. The company, which later changed its name to E.T.B.O. Services, is owned by Oren, his father Hezi and his brother Lior Shabat, according to Israel’s corporate registry. A smaller portion of the company’s shares are held in trust for Yossi Almaliach, Ronen Tubul, Ohad Tzori and Yoram Menachem.

Banc De Binary’s Wikipedia article was posted in 2012. At the time, the company billed itself as a group of “private options bankers” and claimed to be located at 40 Wall Street in New York City. (The company reportedly had a “virtual office” there. This address, known as the Trump Building, has been used by other binary options-associated firms like the SEC-sanctioned EZTrader and the e-wallet service Neteller).

By 2013, the article had been deleted twice by Wikipedia administrators “for being purely promotional and thus violating Wikipedia’s policy against advertisements,” Smallbones said, but the article kept reappearing and would become a focus of frenzied editing. Wikipedia editors also conducted an investigation that led to the banning of the article’s original creators as “sockpuppets,” an internet term for users who assume multiple identities for purposes of deception.

Initially, Banc De Binary claimed to have an office at 40 Wall Street (Youtube screenshot)
Initially, Banc De Binary claimed to have an office at 40 Wall Street (Youtube screenshot)

In addition, a biography of Banc de Binary’s founder Oren Shabat (who has adopted the name of Oren Laurent) was deleted by other editors three times in 2013 due to perceived promotional content or because the article’s subject was considered “not notable.”

Smallbones explained that it is common practice for editors to propose deleting Wikipedia articles that seem to have been created for purposes of self-promotion or advertising and that lack objective information from a reliable news source.

“The terms of use for Wikipedia and for almost all the websites run by Wikipedia’s parent, the nonprofit Wikimedia Foundation, contain a simple provision regarding paid editing,” he said. “All paid editors must declare that they are paid and who is paying them, thus allowing volunteers to monitor and change any paid edits. Undeclared paid editors are not allowed to contribute to any of these sites. Advertising, marketing, and public relations text is prohibited by Wikipedia policy.”

In addition, editors with a conflict of interest (for instance, individuals editing their own Wikipedia pages) are strongly discouraged from working on those articles where they cannot be objective. However, they are permitted to make suggestions on the talk page.

The Banc de Binary Tower in Ramat Gan in 2014 (CC BY-SA BDBJack, Wikipedia)
The Banc de Binary Tower in Ramat Gan in 2014 (CC BY-SA BDBJack, Wikipedia)

According to Smallbones, the flurry of activity surrounding the Banc De Binary article began when the US government filed civil charges against the company in June 2013, accusing it of illegally offering US investors binary options without being registered.

John Berry, a senior lawyer for the U.S. Securities and Exchange Commission, said in a May 2016 interview with BBC radio that not only had Banc De Binary sold ostensible financial products to investors without being licensed to do so, but it had deceived those investors as well:

“We presented evidence to the court that Banc De Binary was telling US-based investors that Banc De Binary was actually based on Wall Street, and we had evidence of online chat discussions where a Banc De Binary broker would tell a US investor, ‘Hey, I live, you know, right down the street from Wall Street, I’ve got a Wall Street address, I work there,’ and so they had repeatedly lied to US-based customers about being in the United States and being based in the United States with a US address on Wall Street and a New York-based phone number.”

In March 2016, the company was ordered by a US court to pay over $11 million in restitution and penalties for illegally soliciting US customers.

Regulators in Australia, New Zealand and Canada have issued warnings against Banc De Binary for illegal activity. Another brand that appears to be associated with Banc De Binary, Option.fm, has been blacklisted by financial regulators in Ontario, Hong Kong, Australia and New Zealand. Banc De Binary was also fined €350,000 ($370,500) by CySEC (the Cyprus Securities and Exchange Commission) in January 2016.

Two days after the US claim against Banc De Binary in 2013, the information about it went up on Banc De Binary’s Wikipedia page. Over the next 11 months, over 500 edits would be made to the article, an unusually high number. According to the Signpost article, over 20 separate sockpuppets were banned from Wikipedia after editing this article.

Smallbones said that the “edit wars” surrounding the Banc De Binary article mainly involved certain editors removing information about the CFTC claim or moving it to the bottom of the article, while other editors would move the information back to the top. The first two sentences of any Wikipedia article are of paramount importance because they appear prominently in what is known as a “knowledge box” on the right-hand side of a Google search results page.

A screenshot of the Banc De Binary Wikipedia page as it appeared on May 23, 2017
A screenshot of the Banc De Binary Wikipedia page as it appeared on May 23, 2017

As of this writing, the box reads “Banc De Binary was an Israeli financial firm with a history of regulatory issues on three continents. On January 9, 2017, the company announced that it would be closing because of negative press coverage and its tarnished reputation.”

But Smallbones says a long and exhausting battle was waged over several years to get the page to its present state. “If you’re getting sued by the SEC and CFTC you can’t leave that out, and that’s the only thing the suspected sockpuppets wanted to do once those lawsuits came in. The main thing they were trying to do was take the information out or put it down at the bottom of the article where no one would read it. Our editors on Wikipedia said ‘no, this is very important.’

Smallbones recalled an argument with a suspected sockpuppet who made the claim that the information should be removed because the CFTC is not a reliable source whereas Finance Magnates — a trade publication for the binary options and forex industries — is.

“An IP editor (traceable to Israel), claiming to be BDB CEO Oren Shabat Laurent, made five identical edits in the same day, all of which were reverted, to include highlights of Laurent’s biography, and lists of products and countries served. He also reduced the coverage of the regulators’ lawsuits and buried it at the bottom of the article,” Smallbones detailed in the Signpost article.

Oren Shabat Laurent and his wife Sivan Laurent sponsor Israel's 2020 Olympic hopefuls (Photo Courtesy Olympic Committee of Israel)
Oren Shabat Laurent (center) and his wife Sivan Laurent sponsor Israel’s 2020 Olympic hopefuls (Courtesy Olympic Committee of Israel)

Smallbones recalled that the back-and-forth disputes around the article were exhausting.

“There were discussions on the Wikipedia discussion pages with 30 different people writing all at once, all on the same topic. It was totally impossible to figure out what everybody wanted. There were some people who would identify themselves as Banc De Binary and others who didn’t identify themselves but were obviously very biased in favor of Banc De Binary.”

Smallbones said it is hard for volunteer editors to compete with paid promoters.

“It’s extremely frustrating when people who are obviously paid are trying to distort information and we’re almost all volunteers. When someone can put five people on an article it’s very difficult for us to stop them — at least in the short term.”

A five-figure fee for Wikipedia ‘crisis management’

In June 2014, a Wikipedia editor mentioned on a talk page that he had witnessed a new record in how much money someone had been offered to do “crisis management” for a Wikipedia page.

The editor described “a recent contract to edit a single Wikipedia article, where the winning editor won the contract after charging something in the five digit range.”

The Wikipedia page in question was the Banc De Binary page and the five-figure sum was offered on a freelancer site to anyone who could rewrite the article in a way that removed the negative coverage, Smallbones told The Times of Israel.

“Banc De Binary is hilarious,” another editor wrote in response to the first editor’s revelation. The Banc De Binary Wikipedia page “was written by a paid editor (since banned) as a whitewash, and then Wikipedia editors got hold of it and converted it to a truthful article about what is clearly a very dodgy company. At that point, socks en masse descended to try to ‘fix’ it for the company, and when that didn’t work, more adverts to delete or revert the content appeared.”

Banc De Binary logo
Banc De Binary logo

But Smallbones said the reality wasn’t funny at all.

First of all, he estimated that about 300 people visited the article’s different language versions per day, and he wonders how many of those, seeing positive statements, went on to trade with the company and lost money.

Second, he wonders how many hours of unpaid labor Wikipedia editors spent on “cleaning up” the article.

“Their paid editors probably put in well over 100 hours on the article. And we had to put in as much time as they did, even more, because if we want to correct something, often we correct it two or three different times because there are a few editors with different points of view.”

“I’ll see something I don’t like and I will correct it and someone will correct me and someone will say that’s not quite right and correct them and then Banc De Binary will come along and put in something else. It’s very labor intensive.”

On May 17, The Times of Israel reached out to Banc De Binary’s founder Oren Shabat Laurent for a response to the allegations in this article but did not hear back from him.

Binary options, forex and paid editing

Banc De Binary is not alone. Smallbones said that paid editing on Wikipedia is rampant in the binary options and retail forex industries. Many Wikipedia articles for such websites get deleted soon after they are put up, he said, because Wikipedia administrators strongly suspect they are created by paid editors for advertising purposes.

In a post from September 2016, a Wikipedia editor recommended several binary options and forex company pages for deletion (only an administrator, a Wikipedia editor with special privileges, can perform the actual deletion), because the editor believed the entries had been created by sockpuppets or suspected paid editors. These included entries for binary and forex firms Spotware Systems Ltd., XM.com, AnyOption, IQ Option, and JustForex.

“All the articles named above have been badly polluted by promotional editors and need a checkup,” the editor wrote. “One thing I noticed across the multiple articles is a heavy tendency to cite how well regulated the various companies and exchanges are.”

All the entries mentioned above were subsequently deleted.

Polluted content that can hurt your pocketbook

Wikipedia is just one of many forums where some binary options and forex companies go to great lengths to create “fake news.”

Fraudulent binary options firms also employ an army of SEO (search engine optimization) specialists, who ensure that the warnings of government regulators or negative press are buried far down in Google search results. (Last year, after The Times of Israel published several articles describing the widespread fraudulent in the binary options industry, one employee wrote to us complaining that “you are ruining the keyword ‘binary options.’”)

But beyond that, some in the industry create fake news sites with an ostensibly large readership, featuring ostensible news reports that appear in Google News about the purported advantages of binary options trading.

Slide from a lecture by Google to the binary options and forex industry at the IFX Expo, May 2016 (Hunter Stuart/Times of Israel)
Slide from a lecture by Google to the binary options and forex industry at the IFX Expo, May 2016 (Hunter Stuart/Times of Israel)

The industry also spends a fortune advertising on Google, Twitter and Facebook.

Some firms pay for sponsored content on mainstream news sites, hire expensive lobbyists and PR firms, cozy up to politicians and donate money to charities. Some companies have managed to get their own executives to appear as talking heads on mainstream television financial programs.

Some binary options companies have been known to make threats combined with offers (known as throffers) to individuals who post negative information about them, offering to refund part of their investment money if they take down their negative review, or if not, suggesting menacingly that “we know where you live.” Still other companies simply disappear from the internet as soon as the number of complaints mounts, only to pop up again under a different name and website.

A Russian connection?

If some of these efforts sound reminiscent of the recent outbreak of fraudulent and polluted content stemming from Russia, among other actors, this may be because the binary options industry has a significant Russian component.

Beyond the Israeli call centers and marketers who commit binary options fraud, many of the investors or ultimate beneficiary owners of binary options companies are Russian. Several of the banks where investors’ money goes after their credit cards are processed are Russian-owned, including but not limited to the Russian Commercial Bank in Cyprus, Sberbank, and VTB Bank in Georgia. Several Russian-owned forex companies, like Forex Club and Master Forex, have partnered with the Israeli platform provider SpotOption to create their own binary options brands, such as option4trade and mfxoptions.

A number of Russian-linked binary options firms, like option4trade and IQ Option, are hosted by the Russian-owned web hosting company Webzilla. Webzilla, whose owner Alexey Gubarev recently sued Buzzfeed for publishing his name in the unverified Trump dossier, has made no secret that forex companies are among its major clients. A number of these clients have been placed on government regulator warning lists.

IQ Option has been placed on an investor warning blacklist by the Monetary Authority of Singapore. Forex Club was the subject of a regulator warning from Belgium’s Financial Services and Markets Authority (FSMA) in 2015.

‘In the end, we will prevail’

As for Smallbones himself, he is a retired professor of finance and a former foreign currencies trader on the Chicago Mercantile Exchange who lived and taught in Russia and Hungary during the 1990s and 2000s.The retail forex industry, as well as its many fraudulent players, first came to his attention then.

““I remember being in a little town in the Urals where all the factories had been closed. Posters were advertising forex trading with a $5 minimum deposit. The poor people who answered those ads had no chance of making any money,” Smallbones said, “but were likely going to be suckered into losing hundreds that they couldn’t afford.

“There were similar scams in Moscow in the 1990s, only with more money involved.”

As for how the binary options scam started, Smallbones waxed philosophical.

“Securities scams go back forever. The original Ponzi scheme was in the 1920s and it involved international postal coupons. Then in the 1960s people were scamming with warehouse receipts for salad oil. Anything that can be changed into money, there is a scam associated with it. People just look at forex and see all the tools needed are there to create a scam.”

Smallbones is drawn to edit Wikipedia articles about financial fraud because the topic interests him. But he regrets that it took at least three years to get the Banc De Binary article to a place where he feels it is accurate and fair.

If that’s how much work was required to correct one small instance of fake news, Smallbones was asked, how can companies like Google or Facebook, which rely heavily on algorithms as opposed to humans, keep the fraudsters at bay?

Smallbones replied, “Yes, well, most Wikipedia editors would probably agree that they can’t.”

He was more optimistic about the ability of Wikipedia to root out lies and paid spin.

The scammers “can make trouble and make us work a long time,” he said, “but in the long run, and this was a very long run, we’re going to prevail.”

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