Israel bans binary options, what’s next?
On the first day of the return to session after the summer break, the Israeli parliament unanimously passed a law banning binary options outright. The bill was passed in the Knesset with a 53-0 vote. First proposed before the summer break of 2017, the binary options ban bill was met with opposition from the industry. Companies operating in binary options will have three months to wind down their operations completely. The ban is all encompassing for binary options operators, platform providers, marketing, sales and software production connected to binary options. So, is the binary options ban the final nail in the coffin? Or, a lot of smoke and mirrors? We take a look at both sides of the argument, evaluate their points and see what’s next for the industry after the binary options ban.
Binary options ban
The bill was passed on the first day of the opening of parliament after the summer recess. Those who claim that this legislation is the end of the industry are focusing on a few key factors of the bill. Aside from symbolically, the timing of the bill does not strengthen the legislation. As with the notion that the bill passed unanimously. It would carry a lot more weight passing unanimously if all 120 members of parliament actually turned up to vote.
The strength of the bill is what concerns us, not when or who passed it. The binary options industry in Israel has three months to cease operations, if operations remain intact, any individual involved in the industry can face up to two years in jail. You cannot help but feel that the terms of the law are favorable to the industry, giving them time and some leeway to get their operations out of Israel. Many of these companies have offshore entities and in reality, the exodus of binary options companies to countries such as Bulgaria, Romania, Ukraine and of course, Cyprus has been happening for the past couple of years. The three-month window is giving these criminals time to make a decision: shut up shop or reincorporate and pivot the scam. Knowing the industry as intimately as we do, we are prepared for the latter.
It’s the Medium not the Message
The King is dead, all hail the King. Binary options brokers are reinventing themselves and their scam under new names. No longer will boiler rooms be set up by binary brokers, instead, expect aggressive sales calls by people claiming to be cryptocurrency brokers. Rather than offering the now illegal leveraged binary options trading, the scammers now offer leveraged trading in cryptocurrencies; Bitcoin, Ethereum, Litecoin etc.
The same rules apply as before, hard selling, promising the world, and bleeding the susceptible client dry. Cryptocurrencies offer a new method of defrauding a client and it is already become a buzzword in the fintech world: ICO, initial coin offering (or insidious con offering) is being touted as the new way to invest and earn big. With bitcoin garnering more and more attention as the price rises to record highs, ICO are being promoted around the web as a great way to invest a small amount for a huge payout down the line. As with binary options, there is nothing intrinsically corrupt with an initial coin offering or bitcoin per se. Quite the opposite, the blockchain works as a decentralized public ledger and the currencies built on the blockchain are as secure as the cash in your wallet. The binary options trading scam did not affect the price or value of any given commodity, as it will not affect the price or value of bitcoin. Even Jordan Belfort came out recently saying that ICOs were “the biggest scam ever” – and he would know!
Now is the time for action
Over the past month, authorities have taken action in the U.S, U.K. and now Israel against unregulated binary options companies. We applaud the actions taken and work in support with government agencies fighting financial fraud. The law that passed may be a watered down version of what was initially drafted, but even so it gives everyone at Wealth Recovery fresh impetus to fight the good fight and help the victims of binary options fraud.