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The fraud of brokers that use binary options as a facade and the FBI alert


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In 2017 the FBI had already posted a very clear warning about binary options being used by websites and apps to deceive and steal customers. The problem is that the instrument itself, the options, exist, but the scammers do not have access to these markets, precisely because it is not a regulated company, much less qualified to operate in the brokerages that offer such products.

How does the coup take place?

The FBI website itself makes it clear how the three main forms are:

  • Confiscation of deposits: says he did not receive the deposit, or invents some reason to justify the confiscation, blaming the payment gateway, blocking the account, or even accusing the customer of fraud;
  • Identity theft: for some reason they start to demand KYC, the sending of photos and selfies of documents, and they use this data to open false bank accounts, or worse;
  • Software manipulation: programmed to let the customer win most of the time, encouraging referrals to friends, and as soon as any large enough deposit in between, the losses begin.

But the company I operate is serious, it has a record

Starting a business in Cyprus, the Caribbean, a tax haven or an island in the middle of nowhere is a relatively simple process. Even if the documentation presented is true, the license to offer securities derivative products is false.

Remember that scammers have enough resources and lawyers to maintain an aspect of seriousness. When in doubt, use FINRA's BrokerCheck system, an American association for the supervision of financial agents.

Example of a company regulated by FINRA

There is a list of entities prohibited from offering products regulated by the CFTC, the Commission for the Trading of Futures Contracts for Commodities in the USA.

List with some companies trying to impersonate regulated companies

What if the company is located in Europe?

Regulatory authority ESMA, responsible for European securities and markets, in mid-2018 banned the marketing of binary options to retail customers. In the same period, it limited leverage to 2x in cryptocurrencies, 10x for oil and 20x for gold.

In the UK and England, the regulatory agency FCA followed the same direction as ESMA, banning the marketing of binary options products to retail customers in March 2019. The same move was accompanied by Germany's BaFin.

Is there a regulated binary option?

Yes, the product itself is not fake or fraudulent. The problem is these sites and apps that claim to be brokers or exchanges, but are actually scams.

Like the pyramids, these projects invest in the client early in life, paying the premium in search of marketing and increasing deposits. Want to donate money to scammer? Go operate binary option, be happy!

About the author

Marcel Pechman served as a trader for 18 years at UBS, Deutsche and Safra. Since May 2017, he has been doing arbitrage and trading in cryptocurrencies.

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