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Binary Options in Israel
Binary options are open to a vast pool of traders because they allow subtle investments limits which make them more affordable to a variety of people. The popularity of binary options has come as a surprise, and it is baffling a lot of individuals who are still to come to terms with this new wave in financial markets. Most people expect many countries to embrace binary options as a key player in the financial industry but to most people surprise they are not universally accepted.
Some states did not take long to identify the potentiality of binary options, for instance, Cyprus was amongst the fast nations to recognize the possibilities and financial potential that binary options come with. On the contrary, other countries are so much against binary options to the extent of ignoring their primary existence. It is hard for binary options traders in such destinations because they are not aware of what to expect, and they are highly taxed to transact using binary options platforms. Also, in these countries, binary options trading is neglected and not regulated which makes it risky for traders because there is high volatility, and cases of scam are so obvious in such unregulated markets.
Some other countries are putting efforts in recognizing binary trading by creating a better business environment for traders and brokers to operate. States can create particular conditions by creating regulatory bodies, rules and standards that guide most of the market activities. Regulation of binary options trade enables traders to feel more secure and is motivated to trade because they know they are protected by legal standards and laws which make it difficult for people and brokers to breach the contract. The United States and Israel are at the forefront of creating regulation policies, and some people think such policies are strict. The increase in policies and laws helps seal loopholes that may result to people being frauded of their hard earned dollars. A market with more policies ensures there is sanity ion the market and the traders relate with the brokers under legal terms and authority.
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Binary Options Trading In Israel. How to Trade Safe. FREE Tips and Strategies Is Israeli Brokers Scams or Regulated? Read More Here!
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The Relationship Between Traders, Brokers and The Government in Israel
The link between the three major stakeholders in Israel is described with complexity of relationships. In Israel binary, options are regulated by Israel securities authority. Israel securities authority has been perceived by many as being too tight on binary options issues in the country. The regulatory body was initiated in 1968 and continues to be a primary regulator in the countries financial markets. The initial mandate of Israel securities authority was to curb and reduce insider trading, fraud and other financial malpractices which negatively affect the safety of investors in the small Jewish state. Israel took long to take binary options as an important niche in capital markets trading.
When Israel elevated the capital gains tax most traders in the country started seeking other avenues to increase their profits through financial capital investment. Binary options and Forex trade provided an ideal opportunity with foreseeable advantages and gains in financial markets. This shift of most Israel traders to forex and binary options resulted in the collapse of the Tel Aviv stock exchange. The drop in Tel Aviv stock exchange sales was apparently blamed on the entry of binary options into the country financial trade. The government watched hopelessly as binary options took over finance trading markets reducing the number of people trading in the traditional financial markets, for instance, the Tel Aviv stock market. The government took advantage of the situation and created a regulation body to reduce the cases of rising number of fraud and scam cases in the binary options trade.
Regulation of binary options trading in Israel
In the year 2020 the government started to regulate binary options trade, this activity was made official by creation of a set of laws and regulations. The famous (Amendment 42) was implemented in 2020 and provided a guideline and a framework for binary options trading creating sanity in the market that was previously marred by chaos and disorganization. This amendment so to it that all locally operating binary options brokers had to be registered within a set deadline in order to continue rendering services in this lucrative market. To date, new brokers are required by law to enlist themselves with the regulatory body before they commence any activities in the country. The regulator has drafted a number of requirements that brokers in Israel binary options trading market have to meet. The body closely follows most of the activities of the brokers to ensure the requirements are met without fail.
Requirements to be met by all brokers in Israel
Before brokers are required to trade in the Israel financial markets using binary options there are conditions that they have an obligation to meet; brokers, have a duty to operate on a particular minimum capital that is computed in relation to the total trading volume. Among other conditions, traders are required to observe strict market restrictions. Brokers are required to provide quarterly and yearly reports on various subjects to both binary options dealers and the Israel security authority report all transaction to the Israel security authority and report their duties and activities to the individual traders. These regulations serve to protect traders from scam and also ensure that the government benefits through taxes. Unlike an unregulated market a regulated market provides security to the traders and increases the total trade in such a market.
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Market protection and binary options traders
Consumer protection is a significant factor in most markets, consumer protection can be created by consumer organizations, government agencies, non-governmental lobby groups and sometimes even producers themselves. Consumer protection is an important tool to contribute to creating sustainability in most markets. Consumers require to be protected from aggressive advertisements, abnormal pricing and to ensure organizations deliver what they promise to. Consumer protection is a continuous activity that is every government top priority when they create laws and regulations to govern and promote safe trade especially in binary options trade where there have been an incidences of scam in which most customers lose their deposits.
Additional rules in binary options advertising are aimed at promoting a more educative advertisement strategy since most consumers are not aware of the risks involved in this trade. Many brokers are not sincere to clients in that they tend to conceal the involved risks to their customers and prospective customers. This behavioral activities is very unacceptable and can result in clients being forced to trade in unacceptable risks that they are not even aware of themselves. To respond to this government agencies regulating binary options has made it mandatory for brokers to include risk warnings in most of their advertisements to make the consumers aware of the risks they face. This has made advertisement of binary options through online media difficult because most online advertisements have to meet a certain word count. Google advertisements are also difficult to make since they require a full risk disclosure.
Regulatory authorities have to ensure the safety of the traders by making sure that the binary options brokers assess the client suitability to participate in binary options trading. Brokers have to make sure operators are aware and understand the risks involved in these trades. Traders who want to join the binary option trade are required to fill particular registration forms and questionnaires before making deposits. It is also a requirement to for brokers to establish documentation of every transaction taking place in an organization. It is further a requirement by the regulatory body for all organizations in binary options trading in Israel to create a kitty to caution the traders against all potential risks.
The regulator also makes sure that there is a leverage rate that is established and should be observed by the binary options brokers. High risk assets should create a leverage amount of up to 20 to 1 of the total trade value. Medium risk assets should be allocated a 40 to 1 of the trading value whereas the low risk assets are accorded a 100 to 1 ratio of the value traded. These changes in business operations and regulations have not made everyone happy in this particular market. The traders are enjoying a lot of comfort and protection whereas binary options brokers are expressing a lot of discomfort because of the increased regulations that are in the favor of the client. It has been noted by some stakeholders in the legislation bodies that these rules will cause some brokers to exit the market. Other dealers in the market will be forced to resort to mergers and partnerships to increase their ability to compete. These regulations are aimed to protect the traders which will result in the growth of the number of traders which will make binary options trading more vibrant than before in the unregulated era.
Israel monument of tolerance
Consequences and benefits of strict binary options trading regulation
The strict regulation has affected different stakeholders in this business differently; depending on an individual perspective strict regulation has both active and adverse effects of the general trading environment. Traders in binary options in Israel can now carry on their transactions in a more safe environment that is regulated by the Israel Securities Authority. Binary trading as a re3sult of strict regulation is now user friendly and reliable than before with high percentage of consumer safety and expected formalities in all the activities. Due to the regulation requirement for provision of the risk information to the traders consumers are now much aware of the options they have and their expectations. The prohibition of wrong and decisive advertisement has ensured honesty in the advertisements and less cheating of trades.
Although these regulations have had unlimited benefits to the traders and the regulation bodies some traders perceive them as unfriendly which has caused them to relocate to other less regulated markets. Less regulated markets elsewhere also features cheap operating costs since not many monetary securities and protocols are required. It is even worse for the brokers in Israel because the law forbids traders from using brokers that are not regulated and certified by Israel securities authority. Huge fines and cost of doing business have really affected binary options brokers in the market making it even harder to operate in the market.
More information about investin to Israel in general perspective can be found in Bluestarindexes website. They provide multiple angles to regular investing, not so much to Binary Options investing.
Israel Binary Options
Binary options have continued to feature global markets entry, Israel was among the few nations who have identified the critical role of binary choices in the financial industry. This resulted in a close supervision of the activities of the traders with the aim of protecting traders and other investors in that financial market. It has been useful for traders in these markets since consumer safety is assured by strict rules and regulations which are clients friendly. Education on the risks and formalities involved in the trade is provided to traders even before they enlist with any broker. This has improved the trade in the market and also made trading in binary options a valuable form of financial investment that is able to compete with stock exchange markets.
The government initiative to regulate that market has contributed to the growth of the trade and also has made it more lucrative than in other possible markets around the globe. Strict regulations however has resulted to the close down of some binary options brokers who deemed the regulations as unfriendly and also has led to increased costs to trade in Israel market. The government has so far improved sanity in the market which was previously unregulated resulting to the loss of clients’ money through scam brokers who were exploitive.
It is expected that the market will even get better and the number of traders is going to increase due to the growing safety of the traders and government regulation. Increased education also has made more people aware what binary options are all about and the risks and rewards involved. What we recommend is that you take a proper Binary Option Robot with your assistance to trading and start making profits with minimum risk. Get your free robot now!
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Binary options: An Israeli scam that has to be stopped
In the days since we detailed the huge, ongoing binary options fraud, we have been contacted by numerous people whose lives have been blighted by it
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On March 23, The Times of Israel published “The wolves of Tel Aviv: Israel’s vast, amoral binary options scam exposed” — a shattering investigation of widespread fraud in an industry known in Israel as “binary options” or “forex.”
Reporting by Simona Weinglass established that much of this industry, which employs thousands of people — many of them young, many of them immigrants — is nothing more than theft. Far from investing in any legitimate, conventional options-buying process, the hapless clients of the fraudulent companies are actually gambling in a crooked casino.
Presenting themselves to naive clients as responsible firms offering an opportunity to make money by trading in options on commodities, the fraudulent companies in this industry turn over hundreds of millions of dollars, perhaps even billions.
They prey on customers attracted by tantalizing get-rich-quick ads online, in emails and through phone calls. Via a variety of ruses, customers are inveigled into placing their money on a bet as to whether a commodity will rise or fall in value. In theory, they make money if their bet proves accurate and lose their stake if it is not. In fact, the customers almost always lose their money sooner or later — because the companies stack the odds against them, or refuse to return their money until they’ve lost it all, or misreport the asset’s value. Unlike respectable brokers who charge a commission and have every interest in their clients making money, these fraudulent firms depend on their clients losing.
A minority of the victims of these fraudulent companies are native Israelis. The majority of the victims live abroad.
Israeli regulators have been unconscionably lax in tackling the fraud, which has been ongoing for several years. The Israel Securities Authority has indicated in recent days that it may finally outlaw binary options dealing, though not the companies themselves. As our article highlighted, however, any such ban will only constrain firms that defraud customers in Israel. Israel-based firms will be free to continue fleecing clients overseas. Already, many of the companies involved are adapting their operations accordingly.
Israel’s overstretched law-enforcement authorities seem paralyzed by the challenge of tackling crime hatched in Israel and perpetrated overseas via the Internet; Israel’s politicians have proven curiously, worryingly disinclined to tackle the phenomenon.
The Times of Israel has reason to believe that some of the industry’s murky secrets have yet to be exposed
The binary options scam unhappily shows the dark side of Israel’s “start-up nation” capacity for enterprise. Rather than a force for good, in this case, Israeli innovation is being used to enable theft.
For example, Israelis’ entirely legitimate expertise in Search Engine Optimization (SEO) is here being utilized in the sophisticated manipulation of Google’s search engine, whereby the companies perpetrating the fraud turn up high on Google searches, the better to attract new clients. This creates a near information blackout, where both potential clients and potential employees have little idea what they’re getting into. So skilled is the industry in manipulating Google, indeed, that anyone trying to research the industry is directed to supposedly informative websites that are often run by corrupt firms and their affiliates.
Unfortunately, Israeli fraudsters have already tarnished the country’s reputation abroad with scams such as the aggressive sale of radically overpriced Dead Sea products in shopping mall kiosks, as well as a complex rip-off involving locksmiths in parts of the United States which also relies on manipulation of Google and other search engines. The scale of the binary options fraud, however, dwarfs such scams, both in its cynicism and in the colossal sums of money involved. The longer it goes on, the greater the damage to Israel’s good name.
In the few short days since our article was published, The Times of Israel has been contacted by numerous people whose lives have been blighted by this ongoing fraud. We will be speaking to them, and following up their stories. The Times of Israel has reason to believe that some of the industry’s murky secrets have yet to be exposed.
The scandal of binary option fraud in Israel
When Dan Guralnek immigrated from Australia to Israel in 2020, he did not anticipate becoming involved in an international internet scam.
“I always wanted to move to Israel,” says Guralnek, who attended a Jewish day school in Sydney.
He was working in the administration of a factory in Australia when his boss died suddenly, and, at the age of 28, he realized it was a good time for him to move to Israel. “I thought, ‘I’m free, no strings attached, I can go.’”
Guralnek enrolled in Jerusalem’s Ulpan Etzion to learn Hebrew, then moved to the vibrant and bustling city of Tel Aviv, where he landed a series of minimum-wage jobs for NIS 25 (a little over $6) an hour: chopping vegetables in a restaurant, driving a disabled person, working the night shift at a hot-dog stand.
But in a city with sky-high rents and a cost of living relative to salaries (PDF) second only to Japan, Guralnek could not survive. He heard that jobs in an industry called binary options paid twice what he was earning, plus commission.
‘It’s gambling and we’re a bookie’ — ex-binary options salesman
“As soon as I started looking for a job, I was getting calls from binary options companies every day,” he recalls. “They dominate the job advertisement space.”
Nor did Guralnek have any difficulty landing a job.
“You walk in and they make a big show like they’re assessing whether or not they want you. But they want you.”
On the day Guralnek stepped into the lavish offices of his new employer in the seaside town of Herzliya Pituah, he knew he had arrived.
“There was free coffee, free food,” says Guralnek. “My salary was 7,500 shekels ($1,900) per month, plus commission.”
Guralnek sat in a call center with about 50 other employees, many of whom were new immigrants fluent in a variety of languages. His job was to call people around the world and persuade them to “invest” in an ostensible financial product called “binary options.” The clients would be encouraged to make a deposit — to send money to his firm — and then use that money to make “trades”: The clients would try to assess whether a currency or commodity would go up or down on international markets within a certain, short period of time. If they predicted correctly, they won money, between 30 and 80 percent of the sum they had put down. If they were wrong, they forfeited all the money they put on that “trade.” Guralnek soon saw that the more trades a client made, the closer they came to losing the entirety of their initial deposit.
He had been instructed to present the binary option as an “investment” and himself as a “broker,” even though he knew they would most likely lose all their money. “The client isn’t actually buying anything. What he’s buying is a promise from our company that we will pay him. It’s gambling and we’re a bookie,” he says now.
Before he started the job, the company gave Guralnek a week-long sales course in which he was taught enough financial knowledge to sound good to a customer who knew less than him. He was also instructed in high-pressure sales tactics.
“They taught us how to make people uncomfortable, how to answer objections, how to keep them on the phone.”
The training session was known as a “conversion course” and the goal was to learn how to turn a telephone lead into a customer by taking their first deposit. At his company, salespeople were not allowed to take a deposit of less than $250.
During the sales course, the company’s management gave Guralnek advice that haunted him later. “They told us to leave our conscience at the door.”
Is this legal?
As the weeks passed, more and more questions formed in Guralnek’s mind — questions that underlined the bizarre financial netherworld he had entered. Why didn’t he know the surnames of his managers? Why were workers prohibited from speaking Hebrew or bringing cellphones into the call center? Who was the company’s CEO? Why was it okay for the company’s Arab-Israeli staff to sell binary options in places like Saudi Arabia while other countries, like Israel, the United States and Iran were off-limits?
Even worse, Guralnek began to suspect that beyond the poor odds customers had of actually making any money, and beyond the aggressive sales tactics, what the company was doing was downright illegal.
For instance, every salesperson was asked to invent a fake name and biography. The call center used Voice over Internet Protocol (VoIP) technology, which displayed a local phone number to customers anywhere in the world. The company’s website listed an address in Cyprus.
“I was told to tell people I had years of experience in the market, that I had studied at Oxford and worked for the Bank of Scotland.”
Guralnek says he was told to present himself as a broker who made a commission on the trades and to emphasize how much money the customer could make while downplaying the risk. In fact, rather than helping customers to make smart trades, the “broker’s” true interest was for them to make unsuccessful predictions and lose their money.
Guralnek says he was also increasingly disquieted by what happened when the clients tried to quit. That’s when they would be asked for a lot of paperwork.
“We would say, ‘You want to withdraw? OK. We need to verify your identity before we can release the funds. You need to send us a photocopy of your utility bill, your driver’s license, your passport, your credit card’” — requirements, needless to say, that had not been mentioned when the client put money in.
While the customer was gathering and submitting this paperwork, a “retention” agent would call them and go through their trades, purportedly figuring out what went wrong and convincing them to continue trading. “We could delay that withdrawal for a long time.”
‘Why should I be blamed for selling something to stupid people? If someone is over 18 and wants alcohol, cigarettes, a knife, a binary option account, it’s his own responsibility’ — Facebook post
If a customer was persistent, says Guralnek, very often the company would stop taking their calls, or send them an email saying ‘we suspect you of fraud’ and freeze all their funds. Because the customer didn’t know the real name or location of their salesperson, “they had nowhere to turn to get their money back,” explains Guralnek.
But the grimmest part of the job for the young immigrant was asking for money from people who seemed poor and dejected.
“They believe they’re doing something good: They’re making an investment, doing something responsible. And they’re not. Every story is sad. Everyone’s got people depending on them. Lots of people are finally getting back on their feet after a drug problem or something.”
The worst was when a client told him, “I’m in hospital.”
“When someone says ‘I’m in hospital and I have cancer,’ we’re supposed to still sell them. But I would throw the sale every time. I couldn’t do it.”
A vast, dishonorable industry
If you type the words “binary options” or “forex” into Facebook groups that cater to new olim (immigrants to Israel), you will encounter long threads of heated exchanges.
“Do any of you who are involved in Forex/Binary options realize that this is a highly unregulated business that it is soliciting gambling to misinformed or uneducated persons?’ reads one such post in the popular Secret Tel Aviv group.
“Why should I be blamed for selling something to stupid people?” a woman replies. “If someone is over 18 and wants alcohol, cigarettes, a knife, a binary option account, it`s his own responsibility.”
“Would you sell it to your grandmother?” the original poster fires back.
In the “Keep Olim in Israel Movement” Facebook group, a woman writes, “Hi all, can someone explain to me what are Binary and Forex jobs and why people are so anti-working in these industries in Israel?”
“This field is dishonorable,” reads one reply. “I’ve done it and I felt nothing but shame and self-loathing for harassing people who never asked for this call and trying to get money out of them that they’re unlikely to ever get back.”
“If you don’t like it, don’t do it,” reads another. “Work what you feel is an ‘honest’ job, make your 6,000 shekels (approx $1,500) a month take away, spend it half on rent and live like a rodent with the rest of it.” He continues, “While the Binary and Forex industry and I pay 50% taxes on our salaries to pay for your health care, social security, and security, I can speak for all of us, we don’t need to be judged.”
According to Israel Securities Authority Chairman Shmuel Hauser, the industry brings in hundreds of millions if not billions of dollars a year. A binary options trade publication, Finance Magnates, recently estimated the amount at $4 billion. Israel’s business daily, TheMarker assessed that binary options companies in Israel employ 15,000 people.
Globally, the term forex normally refers to legitimate trade in foreign currency, while binary options is the name of a financial instrument. In Israeli popular parlance, however, “binary options” and “forex” are often lumped together as part of the same, largely fraudulent industry: In forex, traders often lose money due to high leverage and margin calls.
At some binary options firms, the online platform is manipulated to provide false results that ensure the customer loses
The “trading” process can work as follows, The Times of Israel was told. Having transferred their first financial deposit to the company, customers log in to an online trading platform, as directed by the company’s salespeople, and place money on a prediction that the price of a currency or commodity will go up or down on international markets in, say, the next five minutes. If the customer predicts correctly, he makes a profit of, say, 72 percent, and the company loses money. If the customer is wrong, he loses all the money he placed on the trade, and the company keeps it. Professional options traders consulted by The Times of Israel said that even a financial genius cannot predict with any confidence what, say, the price of gold will do in the next five minutes; rather than an investment, the transaction is really nothing more than a gamble.
The misrepresentation of gambling as responsible investment would be bad enough.
What’s worse, though, and blatantly corrupt, The Times of Israel was told, is that, at some companies, the house is bent. A variety of ruses are used. The potential payout for a correct prediction is complex, opaque and calculated to minimize the company’s loss. If an asset is behaving in a predictable way — say, the price of copper starts to climb following an earthquake in Chile — the company will pull that asset from the online platform. At some binary options firms, the online platform is manipulated to provide false results that ensure the customer loses.
Estimates of the number of binary options and forex companies in Israel vary from 70 to several hundred. The IVC Research Center, a company that provides information about Israel’s technology sector, estimated in its 2020 yearbook that there are 100 online trading companies in Israel, the overwhelming majority of which fall into the categories of forex and binary options. IVC estimates these companies employ more that 2,800 people in Israel. However, the yearbook states, “it’s difficult to gauge the actual size of the online financial trading industry in Israel,” in part because the industry is “low-key” and its “Israel nexus is often understated.”
A 2020 report on the Israeli Internet industry by TheTime startup incubator says that of the 90 Israeli Internet companies earning revenue of $10 million or more per year, 15 were online trading platforms, many of them trading forex and binary options. Three of these, according to the report, were assessed to have revenue of at least $100 million a year. Some other companies on the list included iForex, bForex, AnyOption, 4XPlace, Optionbit and Banc de Binary.
How many are fraudulent?
It is anyone’s guess what percentage of online financial trading companies engage in unethical, illegal and/or fraudulent practices. One distinction many people interviewed for this article drew was between unregulated and regulated companies.
Several large, better-known companies with Israeli founders or major sales and marketing operations in Israel are regulated in Cyprus, which gives them license to sell financial products in individual EU countries even if they are not regulated in those countries.
Many forex and binary options companies operating in Israel, however, are unregulated.
Sam C., a recent immigrant to Israel from the United States, describes his experience working in an unregulated binary options company last summer.
Many customers had clicked on an ad hawking ways to earn money from home. ‘They actually believe that they’re going to become a millionaire just by doing this’ — former customer service staffer at a binary options firm
“They make it extremely, extremely hard for customers to withdraw their money,” says Sam, who worked in customer service and who asked that his real name not be used.
“You have to find a copy of your driver’s license, a copy of your utility bill and there are so many rules and requirements. Half of the calls I had to deal with were just people complaining, saying that it’s been months and I need my money now. I need it to pay for this or that. Pretty much the company just refuses to give it up.”
In fact, Sam says he “cannot confirm” that any customer ever received payment or withdrew their money during his few months working at the company.
“People would call back and call back. And eventually, sometimes one of my managers would say, ‘Don’t take that person’s calls anymore and close his account.’ They would say, ‘We’re done with him and all the money doesn’t matter. Don’t take calls from him anymore.’”
Most of the customers of Sam’s company were from the United States, even though it is against US law for companies to sell binary options to US citizens in this way. Additional clients were from Africa, Qatar and Saudi Arabia. Many had clicked on an ad hawking ways to “earn money from home” or watched a video that claimed to reveal secret investment strategies.
“The majority seemed to be… the stereotypical dumb person,” recalls Sam. “You don’t even realize that people like this exist outside of movies. They actually believe that they’re going to become a millionaire just by doing this. And it’s almost sad.”
Asked about his managers, Sam said they were young Israelis who appeared to think it was cool to rip people off.
“They seemed like they had just watched ‘The Wolf of Wall Street’ and wanted to emulate the characters. The banter they would have, would be like, oh yeah, I can’t believe he fell for that, I can’t believe you got him to invest $300.”
Sam says one his managers would actually quote Leonardo DiCaprio’s sales pitches from the movie verbatim over the telephone when trying to sell binary options.
“‘Hello, John. How are you doing today? You mailed my company a few weeks back, requesting information on an investment that had huge upside potential with very little downside risks,’ he would quote from memory. ‘Does that ring a bell?’”
“I thought it was kind of pathetic, to be honest,” recalls Sam.
In 2020, the United States outlawed the marketing of binary options to its citizens, except on a handful of regulated exchanges. On its website, the Commodity Futures Trading Commission (CFTC), an independent US government agency, alerts investors to “fraudulent schemes involving binary options and their trading platforms. These schemes allegedly include refusing to credit customer accounts, denying fund reimbursement, identity theft, and manipulation of software to generate losing trades.”
“Trading binary options can be an extremely risky proposition,” warns another US-based regulatory agency, the Financial Industry Regulatory Authority (FINRA), on its website. “Unlike other types of options contracts,” says FINRA, an SRO that regulates member brokerage firms and exchange markets, “binary options are all-or-nothing propositions. When a binary option expires, it either makes a pre-specified amount of money, or nothing at all, in which case the investor loses his or her entire investment. Trading binary options is made even riskier by fraudulent schemes, many of which originate outside the United States.”
In Israel, many so-called “forex” companies are actually selling binary options, meaning that a client bets on whether a currency will go up or down, rather than buying the currency, Jared K. a former Wall Street broker explains to The Times of Israel.
“Traditional forex is I buy at 3.50, I sell at 3.60. Binary forex (that is, forex in the world of binary options) is saying ‘if it goes to 3.60 I win money, let’s say 20% more than I bet, but if it goes to 3.50 or lower, I lose.’”
Trading binary options is made even riskier by fraudulent schemes, many of which originate outside the United States — US government warning
Graham P., who currently works in marketing for a large, Cyprus-regulated binary options firm in Tel Aviv, says he knows about efforts to manipulate software as described by the CFTC — cynical intervention by binary options firms to ensure they win, the industry’s equivalent of a rigged roulette wheel in a casino.
“I spoke to a guy I was potentially going to work with, and he had actually developed a binary options platform. He said that everyone he met who was interested in buying the platform (to start their own company) wanted him to create a back door.”
By “back door,” Graham means that companies want to be able to manipulate a “trade” at the last minute if a customer or group of customers appears to be winning too much.
“Let’s say 70 percent of the traders are for some reason betting that oil is going to go up. So then the companies say, gee, if we make just 30 percent win, we’ll be able to keep a lot more money. And the algorithm does that. It’s very easy to tell the customer, oh, the line fell a little bit below your position.”
If the customer brings proof that the price of oil did actually go up to where they predicted it would, the company will point them to the fine print, which states that the company has its own algorithms which may differ from real-time.
“Trading rates assigned to the assets on our website are ones at which our company is willing to sell binary options to its customers at the point of sale,” reads a typical disclaimer on many binary options websites. “As such they may not directly correspond to real-time market levels at the point in time at which the sale of options occurs.”
Graham, whose company is regulated in Cyprus, said that in his view “the entire binary options industry is fraudulent.” If so, this represents cynical and systematic corruption on an huge scale — dwarfing such damaging scandals as the illegal hawking of Dead Sea products by Israelis at kiosks in malls around the world — unconscionably allowed to flourish, with extremely grave potential repercussions for Israel.
”For some crazy reason it’s legal in Europe. Individual European nations are letting binary options fly. While countries like the United States smelled the bullshit a long time ago and made it illegal.”
Graham said that on a gut level, he would like to see the industry shut down, but he is worried.
“There’s so much money pouring into the city; it’s literally an industry here — I’m including forex too. It’s probably paying for the subway system we’re installing. Can you imagine thousands of people in Tel Aviv out of work?”
‘A bad reputation’
Chaya Berkowitz, an eight-year veteran of forex companies in Israel, tells the Times of Israel that her own experience in the industry has been good. “I’m not oblivious. I’m aware that it has a very bad reputation. I don’t think that’s 100 percent justified.”
Berkowitz asserts that there are legitimate companies in the industry, and rattles off the names FXCM, Alpari and FXPro, none of which are based in Israel.
“If you have ten forex companies, probably six or seven of them have bad reputations that give the others a bad name. It’s unfortunate because the others take their business seriously and do care about their clients,” she says.
Asked if those six or seven are guilty of fraud, Berkowitz avers, “I wouldn’t say they’re committing fraud. They have the reputation of lying to their clients and misleading advertising. That definitely exists, but there’s a reason some of the big brokerage firms are still around. It’s because they usually play by the book — otherwise they’re not around very long.”
Berkowitz estimates that in legitimate forex companies, two or three out of 10 clients do earn profits and are able to easily withdraw their money. Asked how to tell if a company is legitimate, she says, “I would look for tougher regulation, not a company regulated on some island somewhere but regulated in the UK, the United States or Australia.”
Cyprus, she claims, has become stricter in recent years. “It’s becoming a more recognized regulatory agency.”
“I would also ask friends or other investors. Personal word of mouth is huge. I would do my homework. Look online to see who has a good reputation. I would ask questions when researching a broker. Do I have easy access to my money? Do you offer education?”
Reeling the customers in
After getting her Master’s degree in Israel and marrying an Israeli, Lynne R., a native Californian, began looking for a job, but was disappointed by what was out there.
“It was really shocking to me, once I started going to companies, to find out how low the salaries were. I wanted to find something more competitive, more similar to what I was earning in the United States.”
People kept mentioning to Lynne that binary options jobs paid well. She posted the fact that she was looking into a couple job sites on Facebook, and “I probably had 25-30 people call to set up interviews.”
Lynne went on five or six interviews, where she learned she was eligible for two types of jobs.
“There’s conversion and retention. For the conversion jobs they were telling me I would make around 15,000 shekels ($3,850) a month and for retention jobs they told me I could make 30,000 to 40,000 ($7,700 to $10,250) a month.”
At each interview, Lynne probed extensively as to the nature of the job. Each company has its own marketing methods, often involving videos that tell the story of a person who learned a secret method of extracting money from the market, she says. One firm told her it attracted customers with a “robot”:
“They said, basically we use a program, which we call a robot. We market it to people and we say it can make small trades for you, like $100 or $200, and there’s an Internet program that will do, you know, some magic and make you a few hundred extra dollars a month.”
Lynne’s job would be to call people who had paid $200 to use the robot, and persuade them to deepen their involvement.
“You call them and you say, well, you have this robot, but it’s not actually that great of a program; it was sold to you by an affiliate of ours. If you want to make serious money, you need to start trading, and we can tell you how. We’re expert traders. All you need to do is make a bigger deposit, and you’ll get a personalized account with us and a personal trader. All you need to do is make a deposit of $500 and we’ll get you started.”
Lynne was eventually offered a retention job, and was enrolled in a two-week training course. The first thing she was told was to never reveal she was calling from Israel. All retention staff were asked to pose as trained brokers working out of a London office. They were required to brush up on the day’s weather in London as well as what was happening in the news.
“You had to make yourself a biography. You needed to think of a business school and say that you went there. You needed to say that you were a trader, that you had worked for either an investment bank or on Wall Street. If you’re a woman, they encourage you to say you’re single because guys will more likely deposit with you. If you’re a guy, you want to have a wife and two kids, because that makes you relate-able.”
The company, she said, was regulated in Cyprus. “The industry is certified for Europe, but you’re not heavily regulated. It’s a way to be EU-accredited without a lot of oversight.” (Finance Magnates, a trade publication of Israel’s online financial trading industry, has written in the past that Cyprus has a reputation for lax regulation.)
‘When we offered training to them, we would share their desktop and walk them through the website. We were told to look around their desktop for pornography or online slots or other signs of compulsive behavior, because that means they’re more likely to make a deposit’ — former binary options retention agent
Lynne says her company’s selling point, which it bragged about, was that it was more ethical than other binary options companies. “If someone asked to withdraw their money we would give it to them within 48 hours,” she says.
When Lynne started playing with her company’s binary options platform, she realized it was fun and addictive, “almost like a gambling game.”
There was lots of adrenaline.
“If you put money in your investment account today, it might give you 3 to 6 percent returns. In binary you see 70 percent coming in right away.”
If conversion agents were expected to get a client to make their first deposit, retention agents like Lynne were tasked with bringing in the big money. The first step was to size up the customer.
“They told us to look up people’s homes on Google Maps to see how rich they seemed and to check their credit card information to see if they had gold or platinum status. Also, when we offered training to them, we would share their desktop and walk them through the website. We were told to [abuse that access and] look around their desktop for pornography or online slots or other signs of compulsive behavior, because that means they’re more likely to make a deposit.”
“You call someone and you tell them my name is Jane Smith, I’m calling from London where I’m an investment banker for this amazing firm. I’m calling to talk to you about how much you actually want to make. We see that you’ve invested $300 but we both know $300 is not going to make you anything. So what is it you actually want to make in a year?”
“So people would say, ‘I want to make $100,000.’ ‘I want to buy a house’ or ‘I want to travel.’”
“They tell you something that they want and then you say, ‘so it will probably take you 6-8 months to achieve that. If you want to achieve it you need to trade every day. I’m going to be working with you. I’m going to give you information about which picks to make every day.”
Lynne said the “broker” would check in with customers regularly, encouraging them, teaching them about the market, and offering tips. When the broker chose a stock for them to bet on, the stock would often perform as promised. When they got on the platform and made their own picks, they started losing. Then the broker would come back and help them make some good calls, and they would win again.
“So basically you come across as this really great trader, but in reality you are just trying to make the volume of trades be as high as possible.”
The next step, recalls Lynne, was to ask for a $10,000 deposit.
“Customers usually balk and say ‘There’s no way I want to deposit $10,000.’ So you pressure them and say ‘If you’re not really serious about making money, then why are we talking right now?’ Traders try everything. Some are really sweet, some try to identify with them, some try to make them feel awkward — whatever the technique is that gets them to deposit. The favorite technique is to say, ‘If you deposit $5,000, I will give you a $5,000 bonus.’ Customers hear that and they say ‘That’s insane. I’m going to deposit.’”
But the bonus, explains Lynne, is a trap.
“You’re not allowed to withdraw any of your money until you use that bonus money something like 30 to 40 times over. Let’s say I give you a $1,000 bonus. You would need to trade that until you made at least $30,000 profit off of it, and then you can withdraw your money. But you will never get to that amount. Let’s say you make $10,000 off of it and you say you want to withdraw, in the contract it will say you can’t withdraw. You can take your original money out, but you can’t take the bonus or the money you earned with the bonus.”
“So clients get stuck in the system, because they don’t want to lose all their money, and by the time they trade 30 times the amount of the bonus, they’ve lost everything.”
The longer you trade, the more money you lose, says Lynne. “You can’t go that far typically and be successful.”
However, Lynne says again, with her company, if you resisted the temptation to take the bonus, and if you put in a request, the company would send you your money.
“They really bragged about the fact that they were good about giving people their money right away. In fact, they encouraged people to take small withdrawals. If a customer had $10,000, they would say, why don’t you take $2,000 and take your wife on a small trip? It’s very calculated with how much they’re giving out and how much leeway to try to give the customers.”
Lynne quit her binary options job soon after the training course because she said she couldn’t stomach taking the savings of “schoolteachers and truck drivers.” Asked whether she thought what she had been assigned to do was unethical or illegal, she replies: “It was certainly unethical. When I tell people about this job, they are shocked. They say, that could never be legal, there’s no way Israel would ever allow that.”
In November 2020 a man by the name of Ariel Marom, who described himself as a former employee of several companies in the forex industry, sent a strongly worded letter to both the Finance and the Ethics committees of the Knesset, as reported in Israel’s financial daily Globes.
“I am calling on the regulator in charge of banking services and the Knesset Finance Committee to immediately take action to stop the wave of plundering, theft, fraud, money laundering, and crime on an international scale that is managed and operated in Israel that is hurting thousands of customers around the world.”
Marom described the forex industry as “economic terrorism” targeting the citizens of many countries.
“When this information becomes public knowledge through investigative reports by the media, which is bound to happen sooner or later, Israel’s status in the world will be damaged and it will unleash a wave of hatred toward the Jewish people and Israel, causing tremendous damage.”
‘When this information becomes public knowledge through investigative reports by the media… Israel’s status in the world will be damaged and it will unleash a wave of hatred toward the Jewish people and Israel, causing tremendous damage’ — letter sent to Knesset committees
Marom said in the letter that he had been searching for a job in recent months and as a Russian speaker had interviewed with forex companies that operate in Israel and target customers abroad. He said he was surprised at the sheer magnitude of the fast-growing industry.
“There are hundreds of jobs currently available to Arabic, Russian, English, Spanish and French speakers as these companies seek new workers for their expanding departments.”
Marom added that after years in the traditional banking industry, he was shocked at the practices he witnessed in several forex companies.
“In the absence of any regulation, they are simply robbing customers. Many people compare forex to a casino, but it’s worse than a casino. A casino hands you your winnings immediately. Forex companies — and I’m talking about most of them — simply do not allow people to withdraw money.”
Marom goes on: “Many forex customers have no idea that the company operates from Israel, especially when we’re talking about the Arabic-speaking desks. Their complaints never reach our justice system and so the industry is not exposed. How is it possible that this has been happening for years, with no local regulation? What happens when thousands of Turks, Russians, Spaniards, Italians and French figure out that the scam they fell for was carried out from here, in Israel? Are our regulators waiting for synagogues to start blowing up all over the world to shut this thing down?”
It is not clear what the Knesset Finance Committee did in response to Marom’s letter. The Times of Israel tried to track Marom down, but the CEO of FeeX, a high-tech startup he used to blog for, said he had not heard from Marom for a few years and had no contact information. Marom’s LinkedIn profile placed him at a high-tech company in Brazil where no one who answered the phone seemed to speak English. A phone call to an “Ariel Marom” listed near Haifa was answered by a woman who said her husband is an astronomer, not a finance professional.
“You’re the third journalist who has called looking for Ariel Marom in the last two weeks,” she said. “Now I’m curious.”
The Times of Israel asked for the help of SixGill, a cybersecurity high-tech firm that specializes in the dark web, to track down Marom, but after a brief automated search, Tommy Ben-avi, a senior analyst at Sixgill, concluded that either “Ariel Marom is not his real name or he doesn’t want to be found.”
The cyber intelligence company did, however, make some interesting observations about the forex and binary options industries. Ben-avi mentioned several companies known to be operating from Israel.
“This industry is a bit shady. It’s hard to get to the owners and CEOs of some of these companies. Most of the time, when you have a company that large, you can see the owner, you can see the shareholders.”
Ben-avi conducted an automatic search with a system that scours hundreds of thousands of sites and closed dark web forums. “It seems like they’re trying to hide their identity. Maybe a few companies have the same owner, and they want to hide that fact,” he mused. “Or maybe their business is not 100 percent legitimate.”
How it’s done on Wall Street
Jared K., a licensed stockbroker from the United States who now lives in Tel Aviv, says that he sees several problems with the local forex and binary options industries.
“On Wall Street, brokers are regulated, transactions are regulated, the money is regulated. Where is it coming from and where is it going? There are rules as to how someone can access money in a claim.”
‘I am shocked that Israel hasn’t shut this down’ — US-licensed stockbroker who lives in Tel Aviv
Furthermore, says Jared, in the United States, a license to sell securities or handle client investments would require a person to meet certain ethical standards. If they don’t look out for the best interest of their client’s investments, it is a criminal offense.
“On Wall Street I can’t put someone in an investment that doesn’t fit them. That is fraudulent. If I called up your parents and said put money in this investment and they lost it all, in theory I could be arrested and go to jail.
“Binary doesn’t have that, there are no repercussions. What happens if someone loses money? Nothing.”
“I am shocked that Israel hasn’t shut this down,” he sums up.
A product that invites fraud
Yaron Zelekha, Israel’s former accountant-general, became known as the country’s foremost whistle-blower in 2007 when he exposed the financial improprieties of a sitting prime minister, Ehud Olmert.
‘I personally would not advise any Israeli to trade with any of these companies’ — Yaron Zelekha, Israel’s former accountant-general
Zelekha told The Times of Israel that he doesn’t want to tar all its players with the same brush, but that binary options and some instruments related to forex are designed in a way that creates a strong incentive for fraud.
“There is a very wide information gap between the public and these players, and they are exploiting it to their advantage. The broker is not giving you a service like in a bank; he is personally betting against you. This is a flagrant conflict of interest, because you’re betting on something, and the person reporting the outcome wants you to lose.”
Such circumstances invite fraud, says Zelekha, and “there is no small number of companies that simply defraud the customer. Sometimes that fraud is very sophisticated.”
Asked whether the entire industry should be shut down, Zelekha responds, “There is no need to throw out the baby with the bathwater, although I personally would not advise any Israeli to trade with any of these companies.”
What the industry does need, he says, is real-time regulation. He says there is software that can now do real-time monitoring of a company’s transactions.
“The Israel Securities Authority (ISA) must have real-time access to these companies’ computer systems.”
Zelekha says the ISA has fought a long battle to regulate the online financial trading industry. “They deserve credit for their efforts, although the regulation won’t be effective if it isn’t done in real time.”
ISA: ‘We probably won’t allow binary options’
The Israel Securities Authority is housed in a 1920s Eclectic-style building in one of Tel Aviv’s loveliest neighborhoods, near the stock exchange. Itzik Shurki, director of the ISA’S Exchange and Trading Platforms Supervision, is a soft-spoken man, but he has harsh words for binary options.
Shurki says a new law to regulate online financial trading industries went into effect in May 2020. The companies that wanted to continue to offer their products to Israeli customers had to request a license from the ISA. Twenty-one companies requested licenses. One was disqualified, because its controlling shareholder, Aviv Talmor, had fled to Cyprus to escape arrest for alleged financial misdeeds. Talmor has since returned to Israel and is currently under house arrest. Two other companies withdrew their applications, leaving 18. Of these, four are primarily binary options companies, while the others seek to offer other types of CFDs, or contracts for differences, as well.
‘With binary options we’ve already informed the companies that our intention is probably not to approve this product’ — Itzik Shurki of the Israel Securities Authority
A year and a half later, only 6 of the 21 companies became regulated by the ISA. The others were disqualified or withdrew their application. Binary options was completely outlawed in April 2020 for Israeli customers, but the companies are still free to target customers abroad.
A quick visit to the websites of several binary options firms does indeed prompt messages saying the service is not available to Israelis.
In March 2020, when this article originally appeared, Shurki said he was aware that the new regulations will not solve the problem of call centers that are defrauding people abroad, but says that such activity is not under the ISA’s jurisdiction, in the same way that the Financial Conduct Authority (FCA) only protects British citizens and the CFTC only protects Americans.
“If an American company tried to sell securities to Israelis, it would be our job to protect our citizens, not the Americans’ responsibility,” he explains, although he adds that the ISA does have very good information exchanges with its foreign counterparts.
Yes, but when an Israeli company steals from people in another country, is that not a crime?
“It is a crime,” says Shurki, but it’s not a crime for his authority to investigate. “There’s no such thing as a vacuum of authority. If an Israeli commits fraud or misrepresentation, that’s the purview of the Israel Police.”
Since those pronouncements last March, in large part due to The Times of Israel’s ongoing reporting on the issue, Israel Securities Authority Chairman Shmuel Hauser has said he is in consultations with Israel’s attorney general, Avichai Mandelblit, to introduce new legislation to ban binary options companies from targeting anyone, anywhere.
On December 19, Hauser told a conference that “around the world, regulators are trying to decide what to do about binary options — whether it is a legitimate form of trade or not. We are not trying to decide. Binary options resemble gambling, and we cannot accept the damage that occurs to investors who invest in this with enormous leverage.”
“Nor can we accept the ugly phenomenon of the aggressive selling of these toxic products to the public. The testimonies that we receive are simply chilling,” said Hauser.
“Hardworking people who saved every shekel in order to be able to grow old with respect fall prey to greedy charlatans who suck the marrow from their bones. They take everything they have and even what they don’t have, and leave them with penniless. I want to say it here explicitly, anyone involved in online trading who acts illegitimately and illegally to cheat, extort and exploit the public, will pay a heavy price.”
The French connection
Perhaps nowhere is the hand-wringing and acrimony over Israel-based forex and binary options trading more anguished than in the community of French Jews living in Israel.
In January of this year, a cover story of the French-language “Israel Magazine,” a monthly glossy magazine and website serving the French-speaking community in Israel and the Diaspora, was titled, “Forex, is it kosher?”
‘A generation of young people is in the process of perverting themselves into worshipers of the golden calf’ — journalist in a piece warning about Forex
In the introduction to the piece, journalist Andre Darmon writes, “The point of this article is not to point a finger at some of our fellow citizens or co-religionists, because the phenomenon is global, but to raise awareness that a generation of young people is in the process of perverting themselves into worshipers of the golden calf. And that earning a living does not mean everything is permissible!”
“These call centers hire lost young souls,” writes journalist Ilana Mazouz in Alliance, a French-Jewish Internet magazine, “many who do not speak Hebrew or English, and for a short time provide the illusion of a normal life in Israel.”
Some rabbis have forbidden people from working in the industry, calling it “theft,” while rabbinic lectures on the Internet in French bear titles like “Forex, dirty work and Amalek.”
Again, numbers are hard to come by for how many young French speakers are employed in the industry. Didier F., a French-Jewish businessman, told The Times of Israel that after he graduated from the IDC-Herzliya, many of his fellow students were recruited by forex and binary options companies.
Didier asserts that many owners of forex websites are members of a French-Jewish community of conmen who are hiding from French law enforcement in Israel, where the police, he alleges, don’t bother them over-much.
As previously reported in The Times of Israel, about 10 recent immigrants from France were charged last year with cyber crimes and telephone scams, while France has reportedly sent Israel 70 additional formal requests for judicial assistance for cases of suspected fraud. A movie was recently made in France about one of these alleged fraudsters. The movie is called “Je Compte sur Vous, French for “I’m counting on you.”
“I love when they say French aliyah has increased so much; now it’s 7,000 people,” says Didier. “It’s great, I’m happy about it. But then you see that many of them are working in the forex industry or binary options industry. You go to Tel Aviv today, when you say to someone in the French community, I work in finance, they immediately think that you work in this shit.”
Adds Didier: “Even if it’s a small amount of money, they’re stealing money from poor people. It’s destroying families. Some people have killed themselves.”
According to a report in Le Nouvel Observateur, a French news weekly, l’Autorite des Marches Financiers, the French securities authority, received a staggering 4,500-plus complaints about forex and binary options fraud in 2020. Those forex and binary options complaints constituted 37 percent of all complaints about securities fraud received by the authority in that year. The majority of the forex transactions that prompted those complaints originated in Israel, the article claims.
What does Google have to do with this?
There is yet another piece of the binary options empire, and it relates to the way Israeli firms manage to reassure customers of their ostensible integrity, via Google.
Let’s say you are a potential binary options customer. A company has approached you about making a deposit, but you are not sure, so you decide to do your homework. You Google, “Are binary options legitimate?”
You will get a list of results, one or two of which may be fraud warnings from the US regulatory body, the CFTC. The first few pages of search results, however, are dominated by sites that purport to warn you away from “scam” binary options sites and steer you toward legitimate ones. Upon closer examination, however, many of these “helpful” sites themselves turn out to be affiliates of the binary options companies.
Next, you might Google, “Are binary options legal in the United States?” Once again, many of the top results turn out to be websites affiliated with the industry itself, rather than an objective source of information. Some of these sites offer misleading statements and half-truths like “There are at this moment no laws both on the federal and state level that forbid US citizens from trading binary options online.”
US law banning binary options is directed at the companies that market them, not the customers who buy them, so there is some truth in that statement. However, the SEC and CFTC clearly warn investors that “they may not have the full safeguards of the federal securities and commodities laws if they purchase unregistered binary options that are not subject to the oversight of U.S. regulators.”
Many countries, including Canada, publish updated lists of unregistered binary options companies that solicit customers in Canada in violation of the law. A recent Canadian list is here. The list features 37 companies. The Times of Israel went to the website of each company on this list. Some were no longer in operation. Others blocked users from Israel (presumably to avoid trouble with the Israel Securities Authority). One now hosts a porn site. Most were hard to pin down to a geographic location. However, based on first- and secondhand sources, The Times of Israel suspects that more than half of these companies, if not the overwhelming majority, operate from Israel.
“Investing with offshore companies operating outside of Canada can be risky and is a common red flag of investment fraud,” the Canadian Securities Authority warns. Yet if you Google “Canada, binary options, blacklist,” once again, many of the top search results appear to be industry-affiliated sites, some of which recommend as legitimate the very same sites that are on the Canadian government’s blacklist.
Bryan Seely, a Seattle-based cybersecurity expert, tells The Times of Israel he is not surprised to hear of these Google search results, which, he explains, show Google’s search engine being manipulated.
“Google doesn’t make a point of censoring stuff; you can find drugs, you can find steroids, you don’t have to go to the Silk Road. Google indexes the Internet and ranks things where it ranks them.”
Asked why, if this industry allegedly has so many victims, their voices don’t show up higher in Google rankings, Seely says, “the victims aren’t as good at promoting what happened to them as the people in the binary options industry are at promoting the stuff they’re selling. The victims aren’t all going to each other’s pages” — so each victim’s page would typically have only a low Google ranking.
Seely, who has been battling to raise public awareness of massive search engine manipulation in the locksmith industry — another area, incidentally, where systemic fraud in the United States, with large-scale Israeli involvement, has caused scandal in recent years — adds, “here’s the underlying issue: Is Google safe to use? Or Bing?”
What he’s really asking, when it comes to the binary options industry, is whether searching Google will lead a potential investor who fears being defrauded to the independent, credible and accurate information he is seeking. The answer, it would appear, is no.
Search engine optimization and the secret of success
Over the last decade, Israel earned the nickname “start-up” nation for its high-tech prowess. But not many people are aware that the country is also a global leader in online marketing and search engine optimization (SEO), an expertise it acquired in the “shadow industries” of porn, online gambling and binary options, according to TheTime’s 2020 report on the Israeli Internet industry. That expertise has plainly been applied by fraudulent binary options firms, whose affiliated sites show up high in Google searches — sending unsuspecting and naive clients their way.
Yoni S., an Israeli high-tech entrepreneur and SEO consultant, explains that without effective SEO, a fraudulent local player remains local, defrauding perhaps a few hundred victims in his vicinity. But with the power of Internet marketing, the scammer’s reach can go global.
The Times of Israel sent Google a request for an interview about the manipulation of its search platform by allegedly fraudulent businesses in the binary options industry, but Google did not respond.
What do the police have to say?
The Times of Israel contacted the Israel Police repeatedly to ask them about alleged fraud in the forex and binary options industries. Their answers underlined how law enforcement is struggling to grapple with the soaring, fast-moving challenge of Internet crime.
“If there are investigations going on into fraud, etc., I don’t have information on this. If someone has filed a complaint to the police, then let me know,” Israel Police spokesman Micky Rosenfeld replied.
A second police spokesperson, Luba Samri, told The Times of Israel, “We got lost in your question. Please focus it more. Who filed a complaint against whom?”
Finally, The Times of Israel called a third spokesperson, Merav Lapidot, and asked her what the police are doing about suspected fraud on a vast scale in the forex and binary options industries in Israel.
“This is something you’re claiming. If no one has complained about it, there is no issue. You want us to check every company in Israel and see if by chance they are committing crimes?”
Told that people who worked inside the industry have described widespread potentially fraudulent behavior on the order of hundreds of millions of dollars, affecting tens of thousands of people, Lapidot replied: “But no one has complained. I don’t know what happens in every company. That’s not our job. You could start a business tomorrow selling jewelry over the Internet. Will the police come to investigate your business?”
To the suggestion that there may be thousands of victims abroad, Lapidot said, “If there is someone who complained, we need to check that specific complaint. We’re not going to check a whole issue.”
Is it possible that an entire industry, much of it allegedly corrupt, is slipping through the cracks between Shurki’s Israel Securities Authority, which doesn’t handle crimes hatched in Israel whose victims are abroad, and the police, which won’t act unless specific complaints are filed with them?
Zvika Rubins, a PR consultant for the Israel Securities Authority, said in March that the law simply hasn’t caught up with the dubious and crooked methods people have devised to make money on the Internet.
“When you talk about bits and bytes, it’s not that simple. Was there a crime? Where did it take place? For instance, let’s say you have a company and it’s incorporated in the British Virgin Islands and its servers are in India and it has a trading room in Israel. Is it an Israeli company? I don’t know.”
Rubins, who stresses that he is not an expert on criminal law, muses that if someone in Israel commits a crime against someone in, say, France, over the Internet, then it might be the responsibility of the French to open an investigation, trace the crime to Israel, and approach the Israeli police about it.
Yoni S., the SEO expert, is outraged by this approach. “In Israel it’s against the law to murder, but if I establish a company in Israel that murders people through the Internet in Malaysia, that’s okay?”
Seely sees the problem as extremely serious and growing: “We’re becoming a global culture and global economy, and physical borders don’t exist on the Internet. It’s become easier to scam people all over the world. We have no protections in place to prevent it and it’s getting worse.”
“It’s a jungle out there,” says Yoni, referring to the fact that people do all sorts of things on the Internet that would be illegal within their own borders.
“The Internet came in, no one has passed any regulation yet, and now there is an opportunity to make tons of money in the jungle.”
A response from inside the industry
Tali Yaron-Eldar, Israel’s income tax commissioner from 2002 to 2004, in 2007 founded eTrader, a binary options firm that targets Israelis, along with Shay Ben-Asulin, who also co-founded AnyOption, one of Israel’s largest binary options companies with revenues in the tens of millions of dollars. In 2020, Ben-Asulin was indicted by the United States for securities fraud, and last month he was convicted of fraud by an Israeli court for helping an Israeli credit card company, ICC-CAL, illegally clear billions of shekels of charges from porn, binary options and gambling websites, as well as conceal the number of canceled transactions. For his crimes, Ben-Asulin will do five months of community service and pay a fine of less than $1 million.
In a 2020 interview (Hebrew) with Israel’s Channel 10 news, when asked if she was discomfited by the fact of young demobilized soldiers and old pensioners losing all their money trading binary options, Yaron-Eldar responded: “Ask the people who invested and lost their money. All of them knew they were entering something risky.”
The Times of Israel contacted Yaron-Eldar in March to ask her about alleged fraud within the binary options industry.
To the extent that this is true, she said, it applies to unregulated companies.
“The companies with a license are very careful,” she says. “AnyOption [a company she is associated with] has a Cypriot license. It is very careful to follow the law. It is being watched all the time.”
In Yaron-Eldar’s view, and contrary to the opinions of other people interviewed for this article, Cypriot regulation is very tough, on a par with the UK’s Financial Conduct Authority (FCA).
Asked about the fact that the Canadian government has included AnyOption on a list of companies illegally soliciting Canadian citizens, Yaron-Eldar replies, “Not that I am aware of.”
In fact, Yaron-Eldar insists that AnyOption is not an Israeli company at all.
“AnyOption does not have offices in Tel Aviv. It’s a company that operates from Cyprus.”
Indeed, a perusal of anyoption.com reveals no references to Israel. Nevertheless, it is no secret that hundreds of employees go to work each day at AnyOption’s offices at 38 Habarzel Street in Tel Aviv’s Ramat Hachayal neighborhood. How does she explain this discrepancy?
“They’re not working for the same company,” she says. “They’re working for AnyOption Israel, not AnyOption Cyprus. The company they work for is a service provider to the company in Cyprus.”
In other words, AnyOption (like many other binary options companies with similar corporate structures) is not in fact an Israeli company, according to Yaron-Eldar’s reasoning. This means that it, and many others like it, is subject to Cypriot law and regulation, not Israeli law. Since much of the regulated part of the binary options industry is subject to Cypriot regulation, the honesty or dishonesty of those firms may hinge on the strength and honesty of Cypriot law enforcement.
Where are the victims?
The Times of Israel contacted the FBI to see if anyone had complained about forex or binary options call centers in Israel, but the agency did not respond.
ASIC, the Australian Securities and Investments Commission, replied in an email, “We don’t comment on operational matters, this includes confirming or denying if we have received complaints about a particular matter or not.”
A French government spokeswoman, however, confirmed that France has been having problems with forex fraud emanating from Israel.
“Yes, there are some cases of fraud, as you say,” she said. “Forex is not per se a fraud but it can be used for fraudulent objectives. We have had some cases between France and Israel, and we are in touch with the Israeli authorities about this. There is a very good cooperation between the two countries and the two services on this issue.”
Back to Australia
Ariel Marom, the mysteriously disappeared former forex employee who wrote that anguished 2020 letter to the Knesset, warned of the fallout when the extent of the corruption in the binary options industry in Israel is exposed.
“What happens when thousands of Turks, Russians, Spaniards, Italians and French figure out that the scam they fell for was carried out from here, in Israel?” he asked in his letter. “Are our regulators waiting for synagogues to start blowing up all over the world to shut this thing down?”
Dan Guralnek, the Australian immigrant, has drawn his own conclusions. “This amount of dishonesty would never be allowed to exist in Australia,” he says. “They would shut down [the industry] overnight.”
Guralnek recently became engaged to an Israeli woman. But he hopes to persuade her to move back to Australia with him, in part because of the high cost of living that drove him to work in binary options in the first place, and in part because of the corruption he has encountered.
“Now I see corruption everywhere I look,” he says. “Anywhere where there’s no light shining on the corruption in this country, it feels like it’s growing.”
CoursTorah.com, the website of a Francophone synagogue near Tel Aviv’s Hamedina Square, has a page on its website warning against the binary options industry, headlined “Stop the Scam!”
“Many people you know work directly or indirectly for these scam websites,” reads the page, warning that binary options and the majority of forex companies operating from Israel are fraudulent. It advises congregants to “run away from these companies!”
And it issues an evidently all too necessary reminder: “Let us remember the eighth commandment, ‘Thou shalt not steal.’”Best Binary Options Brokers 2020:
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