A federal court has dealt a major blow to an international fraud network that deceived investors through fake binary options platforms. The U.S. District Court for the Northern District of Illinois ordered five offshore firms and three individuals to pay over $451 million in restitution and penalties after they were found guilty of defrauding customers worldwide.

Between 2014 and 2019, the defendants reportedly operated fraudulent binary options trading platforms under names like BigOption, BinaryBook, and BinaryOnline. The ruling marks a significant step in U.S. regulators’ efforts to clamp down on illicit online trading schemes.

Court Ruling and Financial Penalties

Through websites, emails, and phone calls, they convinced customers, many in the U.S., that they could earn significant profits trading binary options. In reality, most investors lost their money, the CFTC mentioned.

The fraudsters went to great lengths to appear legitimate. They misrepresented their identities, financial expertise, and locations while using aggressive sales tactics to lure victims.

Customers were promised “risk-free trades” and bonuses that came with hidden restrictions, making it nearly impossible to withdraw their funds, the regulator explained in statement today (Wednesday). The firms also manipulated trading platforms to ensure that clients would lose money on trades.

The court found the defendants guilty of fraud and other violations of the Commodity Exchange Act (CEA). They are now required to pay $112.9 million in restitution to victims and an additional $338.7 million as a civil monetary penalty. The ruling also permanently bans them from trading in CFTC-regulated markets or registering with the commission.

Affected Companies

According to the statement by the CFTC, the convicted entities include Yukom Communications Ltd. (Israel), Linkopia Mauritius Ltd. (Mauritius), Wirestech Limited (Marshall Islands) doing business as BigOption WSB Investments Ltd. (Multiple jurisdictions) doing business as BinaryBook, and Zolarex Ltd. (Marshall Islands) doing business as BinaryOnline.

The case originates from an August 2019 complaint filed by the Commodity Futures Trading Commission. One defendant, Yakov Cohen, previously reached a separate settlement with the court, agreeing to return $7 million in illegal profits. The court also found Israeli citizens Yossi Herzog, Lee Elbaz, and Shalom Peretz liable for their role in the fraud.

In recent years, the agency has intensified its crackdown on binary options scams, warning investors about the risks associated with unregulated online trading platforms. In a separate case, dozens of Israelis were extradited to Germany, last year, in a case involving crypto and binary options scams that led to the loss of nearly 1 billion euros in five years.

Many fraudulent firms operate under different names and move funds across multiple jurisdictions to evade detection. The regulator has urged investors to conduct due diligence before engaging with any online trading platform.

This article was written by Jared Kirui at www.financemagnates.com.Retail FXRead More

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