2017 went down as the year that the authorities began taking real action against unregulated binary options companies. For the binary options industry, the last 18 months or so has been extremely testing to say the least. Looking at the latest incidences, the next 18 months are set to be even worse for those involved in this tarnished and corrupt industry.
So, what’s going on? after almost a decade of operating binary options scams without recourse, the tide is starting to turn and those who have acted unlawfully are being washed up on the shore. Following years of complaints, months of investigative inquiries, parliamentary hearings and public outrage, the authorities are taking notice and more importantly taking action.
In London, raids were carried out in the financial center following an increase in UK customer complaints in the first half of 2017. Authorities searched offices that they believed to be ‘boiler room’ sales operations. In the US the FBI have carried out arrests of binary options operators and over the past few weeks there have been multiple arrests in Israel, including a high-ranking member of the Labor Party Central Committee whose story only came to light recently after an initial ‘gag order’ request was dropped by the judge.
Nizar Alimi’s arrest was the latest in a series of events that has rocked the industry globally, and the Israeli domestic political scene. Nizar, 49, is an adviser to former Labor Party Chairman Isaac Herzog as well as being, according to the arrest, allegedly involved in the running of six online trading companies – all registered outside of Israel.
Indeed, it is testament to the lack of legal oversight and regulation against binary options that Mr. Alimi, despite being connected to the running of six online trading platforms, was charged with…tax evasion. Israeli Authorities are seemingly taking the “Al Capone” route to justice while the law tries to catch up with these technologically savvy criminals.
Mr Alimi is a well-connected Arab-Israeli; a popular lawyer in Israel who has previously ran for parliament. The reality is that law enforcement today is facing a bigger challenge than ever before as these criminal enterprises have no borders and can operate virtually anywhere. What is crucial to the authorities’ success is collaboration on an international stage. This was somewhat shown when the FBI recently carried out the arrest of an Israeli binary options CEO on American soil.
International Cooperation Needed
The crime is international in scope and the criminals are international in their operations. If there is any chance of bringing the binary options scam phenomena to an end, the authorities cannot be limited to their national borders. The signs of an internationally coordinated response are showing. Countries around the world are implementing their own laws, such as in Canada, where a complete binary options ban was recently passed.
Canada’s decision to ban all binary options whose expiry period is shorter than 30 days is one that should be implemented in all countries that currently allow binary options trading. The minimum 30-day trade is a smart piece of regulation, it allows the regulated operators to continue, and cripples the unregulated operators from manipulating the markets as easily as they could do before.
International cooperation is vital to closing the fence on where these scams can operate. If Canada’s recent law was implemented worldwide, it would have a devastating effect on unregulated operators. The problem is that without full international cooperation, unregulated binary options companies will simply move their operations to a jurisdiction that allows them to operate and continue.
The amount of money that some of these companies turn-over make it difficult for regulators and politicians who are always in need of fresh revenue streams and political capital, (as was highlighted by the recent political arrest in Israel), to implement regulation.
Israel’s lack of movement on banning unregulated binary options trading has caused independent intelligence agencies such as Wealth Recovery International to step in and take action. What we can do is provide critical intelligence on the whereabouts and identities of unregulated binary options industry leaders, whilst connecting victims of binary options scams with financial fraud attorneys who then proceed to recover stolen money.
The Future for Binary Options
An industry that, according to conservative reports is worth $5bn – $10bn a year is not something that will disappear without concerted effort from regulators. There are a lot of people depending on this money to continue to flow, and so determining the future of binary options is unclear: on the one hand there is what can only be described as an avalanche of bad news falling on the industry with arrests, closing down of operations and real horror stories coming to light on the practices of some of these companies. On the other hand, this is possibly the most profitable technological scam ever conceived. The criminals are smart and the technology is always progressing faster than the law can keep up. Without knowing too much about the moves of these criminals, we would strongly advise being skeptical and diligent if you see adverts online for investment opportunities in diamonds or bitcoin.
The recent wave of arrests and criminal investigations has not just been focused on the unregulated operators, but also on the platform providers. Authorities are cautious and suspicious that these software companies may be implicit in the scam, allegedly by coordinating and manipulating trades via the platforms to ensure clients lose their money.
If the last year has been rough for the binary scam operators, the next 18 months is going to be the real test. Will the unethical actors be brought to justice and made accountable, or will the binary options scam industry continue to evolve and evade?