Binary Options Scams Run Rampant in Israel
Hundreds of
millions of dollars is the estimated size of Israel’s binary options industry.
The industry employs thousands of people, but corrupt practices were brought to
light in March. Investors worldwide are being cheated out of millions of
dollars, with the potential to ruin Israel’s reputation in the process.
The story
of Dan Guralnek underscores the growing trend of binary options companies in
Tel Aviv that have seemingly taken over the job advertisement space.
Guralnek
moved to the city when he was 28 years old, working odd jobs before realizing
that sky-high rents and cost of living was too high for his salary. “I was
getting calls from binary options companies every day,” he stated.
Guralnek
recalls entering the lavish office of his new employer and landing the job that
opened his eyes to the scams and corruption of the binary options industry in
Tel Aviv. “My salary was 7,500 shekels plus commission.” Clients from around
the world were contacted by Guralnek and his coworkers in an effort to persuade
them to invest in binary options. The “gamble” could net 30% – 80% of the money
put down, or it could be lost.
Binary
options are promoted as an investment, although it’s a gamble. Investments have
the potential to make money over time, and while Guralnek is promoted as a
“broker,” the client doesn’t invest in anything. Working more as a bookie than
a broker, Guralnek’s training consisted of how to keep people on the phone,
answer objections and make people feel uncomfortable.
Management
told Guralnek “leave your conscience at the door,” a piece of advice that
haunts him still.
Guralnek’s
story is not unique, says FX Instruction, a company that offers arbitration for
people that have been scammed in Tel Aviv’s binary option industry.
Israeli
regulators have done little to put a stop on the illegal practices of the
industry. Victims, normally from abroad, are coerced into making an
“investment” through a series of tactics aimed at promoting trust and
authenticity.
“I was told
to tell people I worked for the Bank of Scotland,” says Guralnek. Voice over
Internet Protocol technology was used to display local numbers to unknowing
victims that believed they were investing through local brokers.
Withdrawals
were tedious, according to reports with retention specialists calling
investors. Clients that failed to continue investing and demanded withdrawals
received emails stating that their accounts were suspected of fraud and their
funds were frozen by the company. The company would often stop taking the calls
of persistent customers, too.
The
industry remains unregulated, with Israel’s forex and binary options industry
estimate to be valued at hundreds of millions of dollars to over $1 billion US
dollars.
French
authorities teamed up with CySEC to tackle Forex and Binary options scams.
Québec adopted binary option scam alerts as a way to help curb scams in the
city. Reports from earlier in the month
show 1 in 3 companies that have been blacklisted from the US commodities watchdog
are Israeli.
Reports
from April indicate that 2,500 victims of binary options scams took up lawsuits
in London. Many of the claims originate from companies in Israel.
Victims
pleaded with Israel’s Justice Ministry in an attempt to recoup money that was
lost through fraudulent means. The Giambrone Law Firm in London is working on
the behalf of 2,500 people that allege they’ve been defrauded through binary
opt ions scams.
Israel’s
Securities Authority is working towards measures to ban the firms from working
with Israeli clients, but the authority has been slow to implement measures to
curb the practice. Authorities also claim lack of authority to stop the
fraudulent companies from working overseas.
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