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Binary Options Fraud
By admin / 18 January 2019

Much of the binary options market operates through Internet-based trading platforms that are not necessarily complying with applicable U.S. regulatory requirements and may be engaging in illegal activity. Investors should be aware of fraudulent promotion schemes involving binary options and binary options trading platforms.

What is a Binary Option?

A binary option is a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition and typically relates to whether the price of a particular asset will rise above or fall below a specified amount. Once the option is acquired, there is no further decision for the holder to make regarding the exercise of the binary option because binary options exercise automatically. Unlike other types of options, a binary option does not give the holder the right to buy or sell the specified asset. When the binary option expires, the option holder receives either a pre-determined amount of cash or nothing at all.

Investor Complaints Relating To Fraudulent Binary Options Trading Platforms

The SEC has received numerous complaints of fraud associated with websites that offer an opportunity to buy or trade binary options through Internet-based trading platforms. The complaints fall into at least three categories:

1. Refusal to credit customer accounts or reimburse funds to customers
These complaints typically involve customers who have deposited money into their binary options trading account and who are then encouraged by “brokers” over the telephone to deposit additional funds into the customer account. When customers later attempt to withdraw their original deposit or the return they have been promised, the trading platforms allegedly cancel customers’ withdrawal requests, refuse to credit their accounts, or ignore their telephone calls and emails.

2. Identity theft
These complaints allege that certain Internet-based binary options trading platforms may be collecting customer information (including copies of customers’ credit cards, passports, and driver’s licenses) for unspecified uses. Do not provide personal data.

3. Manipulation of software to generate losing trades
These complaints allege that the Internet-based binary options trading platforms manipulate the trading software to distort binary options prices and payouts. For example, when a customer’s trade is “winning,” the countdown to expiration is extended arbitrarily until the trade becomes a loss.

Beware of Overstated Investment Returns for Binary Options

Additionally, some binary options Internet-based trading platforms may overstate the average return on investment by advertising a higher average return on investment than a customer should expect, given the payout structure.
For example, a customer may be asked to pay $50 for a binary option contract that promises a 50% return if the stock price of XYZ company is above $5 per share when the option expires. Assuming a 50/50 chance of winning, the payout structure has been designed in such a way that the expected return on investment is actually negative, resulting in a net loss to the customer. This is because the consequence if the option expires out of the money (approximately a 100% loss) significantly outweighs the payout if the option expires in the money (approximately a 50% gain). In this example, an investor could expect -- on average -- to lose money.

Always Check the Background of a Firm or Financial Professional

Before investing, check out the background, including registration or license status, of any firm or financial professional you are considering dealing with through the SEC’s Investment Adviser Public Disclosure (IAPD) database, available on Investor.gov, and the National Futures Association Background Affiliation Status Information Center’s BASIC Search. If you cannot verify that they are registered, don’t trade with them, don’t give them any money, and don’t share your personal information with them.

If you were a victim of a scam, do not hesitate to schedule a Free Consultation with our team. Perhaps we can be of assistance in your fund recovery efforts.(305)-705-6197 or Contact Support

Comments (4)
Logan GrahamMarch 25, 2019
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How do you do it, not very informative telling how people get scammed, many knows that, and what's your price for get the money back to the investor?

Patrick StewartJune 06, 2019
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Thank you for what you do. These scammers are worse than bank robbers - at least a bank robber has the integrity to tell you he's robbing you.

Luca ChapmanAugust 07, 2019
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The biggest problem is that people don't apply the first investor's rule: "Never invest money that you cannot afford to lose".

George RyanAugust 12, 2019
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Binary options are a huge scam; stay away. They are widely understood as a scheme to separate naive traders from their money and their brokers make indeed no good impression at first look. Some are regulated in Cyprus under a fake address, others are not regulated at all.
They spread fabricated stories about huge profits with robots or EAs over the internet. They manipulate their price curves for preventing you from winning. And if you still do, some refuse to pay out, and eventually disappear without a trace (but with your money).
You’re trading not against the market, but against the broker. The broker needs you to lose, otherwise he would not make any profit. Thank you Recoveryhelp for saving me.

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