The Exportation of
the Binary Options Boiler Room Operations:
As 2017 draws to a close, so does the legal grey area in
which binary options scams were used to operating. The decision by Israel’s
parliament to outlaw binary options come January 2018 is having an affect
already as the people behind the fraud are
shutting up shop.
So, this means that the law is effective and it’s the
beginning of the end for unregulated binary options platforms scamming innocent
people? No, unfortunately not. Instead, what we are seeing is an exodus of the
operation; opening up boiler room sales operations in jurisdictions that either
allow for binary options or simply don’t enforce the law enough for it to be a
deterrent to any of the actors. A popular jobs board in Israel still to this
day is advertising for binary options jobs – what is most interesting is the
amount of these companies who are looking for workers that are prepared to work
abroad. The destinations of the new, old operations are Bulgaria,
Romania, Ukraine etc. By moving their operations outside of Israel (and fleeing
from the UK before they were raided), the fraudsters aim is to become
unreachable to any prosecutors.
This is not true.
Those recovering money for binary options victims are not
restricted to one jurisdiction – with international cooperation building and a
realization of just how much damage the binary options scammers can do, there
is a real push to squash these scammers wherever they are.
The reality is that just because the operations have moved
offshore, the operators are still (by in large) Israeli nationals. This allows
investigators to connect the dots and apply pressure on both sides of the
operation – domestic and global. You can run, but you can’t hide from the law
in the long run. Since the Federal Bureau of Investigation (FBI) got
involved, this cooperation has stepped up as other countries, including UK and
Australia have carried out raids, investigations and in some cases arrests.
Rise of the
Cryptos
As well as moving the operations offshore, many of the
operators have tweaked the model itself so as to ensure the same scam can continue
behind the curtains whilst appearing as a whole new business. Binary options as
a product has been damaged incredibly as it has become synonymous with
scammers. So, what these fraudsters have done is repackage the product.
2016: “So, you want to trade binary options – it couldn’t be
easier to win!”
2017: “So, you want to trade cryptocurrencies – it couldn’t
be easier to win!”
As cryptocurrencies have entered the zeitgeist, it is the
perfect product switch. The public are aware of cryptocurrencies, but lack the knowledge
needed to truly understand how they work, and how the large fluctuations in the
price can be manipulated to become an advantage (to a trader who knows when to
buy and sell – you can make money quickly). It is such a simple change on the
back-end and bingo! “No, we don’t touch
binary options, would you like to trade cryptocurrencies?”.
Conclusions
There has been both a physical and technological pivot made
by the binary options industry in recent months. Physically they have shut
up shop in Israel as the Israeli parliament outlawed the industry and
technologically they have pivoted towards cryptocurrencies as the go-to product
to hide their fraud behind. Essentially it is the same business model as binary
options, after all it is an extremely profitable model.
2018 will be an interesting year as the authorities are
already wising up to this new fraud and taking appropriate measures. The asset
recovery firms will continue to chase these fraudsters down no matter where
they are based. Now, with the introduction of the FBI and its huge reach, the
name of the game is to cooperate, share the data, locate, freeze assets and
bring about a long-awaited justice to the thousands of innocent victims that
have been swept up in this global billion-dollar crime wave.
