Binary Options scams continue unchecked and are getting worse. There has been explosive growth in this type of investment scam, fueled by heavy advertising on high traffic websites such as yahoo. This isn’t the first ttime we have written about losing money through binary options scams, but still nothing gets done to stop them.
The pitch is always the same – here is a person who did not have much money but suddenly has a garage full of fast cars and jets off regularly for 5 star holidays in far-flung and exotic destinations. All achieved with the help of the trusted options analysts after an initial investment of not much more than one week’s grocery bill.
The argument is compelling and emotional, but logically absurd. Risk free high return investment opportunities are extremely rare, and certainly not trumpeted across the internet for all to see. The winners in the binary options scams business are the organisers and the promoters who act as middle men. The losers are invariably the punters, because that’s the way the game is played. “Investors” always lose.
It was particularly distressing to read in last weekend’s Sunday Times about one victim who lost £640,000 when she was led to believe that she was making money hand over fist. The money was a windfall inheritance and when she closed her account with Options.FM she was left with little more than £2,500. Her broker, Options.FM, was and is just one part of a network of inter-related businesses spread across the USA, Belize, St. Vincent, Bulgaria, Cyprus and Israel. This structure is typical of the industry and is designed to avoid scrutiny by national regulators and to put the operators beyond the reach of local law enforcement.
Binary trading operators are now targeting the UK market with a vengeance, so UK “investors” are set to be the biggest losers. So far, our regulators have made little effort to rein in their activities. Our banks and other financial institutions are now required to comply with strict codes of conduct and licencing requirements. These are a costly addition to the overheads of any financial institution, but accepted as a necessary evil to protect the interests of consumers. Binary trading through the internet has cleverly avoided every one of these safeguards.
Questions need to be asked as to why our own Financial Conduct Authority, which has wide-ranging regulatory powers, seems to have been totally blind to the emergence and growth of this “industry”. Our regulators have had plenty of time to act.
As long ago as 2010 the prestigious American site www.Forbes.com ran a piece:
“There are lots of ways to lose your money in this world but here’s one I hadn’t encountered before: binary option Web sites. They have become popular over the past few years with new ones appearing all the time: anyoption.com, bulloption.com, spotoption.com, binaryoption.com, etc. etc.
“The sites appeal to the same type of people who play poker online. But they somehow have an aura of being more respectable because they represent themselves as offering a form of investing. Don’t kid yourself. These are gambling sites, pure and simple. It’s probably just a matter of time before regulators move in on them.
“Until that happens, they seem to be doing great business.”
Meanwhile, the FCA was asleep on its feet while the wolves were circling. Regulators should have taken effective action long before now.
Belatedly, City of London Police and the Gambling Commission came together to try to devise a strategy to combat this serious and growing fraud. Alarm bells are already ringing in Canada and Australia, and also in Holland, where legislation is planned to ban any advertising for binary trading.
All this is far too late for the many people in the UK who have been lured into this fraud and lost an average of £20,000. Cross-border trading through the internet is an open invitation to fraudsters who rely on opaque organisational structures to avoid legal sanctions or compensation claims. Binary trading is the tip of the iceberg. Twenty years after the birth of the internet the world’s regulators have still not come up with a solution to these problems. It is high time they did so.
In the meantime the binary trading has become more sophistocated and corrupt. Some trading platforms are little more than a website so the customers are blatantly defrauded from the outset. In other cases software has been tweaked to manipulate prices so that the customer wins to start with and then gets wiped out when he ups his “investment”. Repayment of any winning becomes next to impossible. Binary options specialist lawyers such as London based Giambronelaw may be able to help recover any losses, but far better to stay clear altogether.
It still beggars belief that the regulators have done nothing to stop these parasites.