The U.S. Commodity Futures Trading Commission (CFTC) on Tuesday announced charges against a pair of offshore binary options trading firms, alleging that they defrauded investors.
A civil complaint by the CFTC was unsealed by a U.S. federal district court against two Israel-based online binary options firms, Vault Options, Ltd. and Global Trader 365 (GT 365).
According to the complaint, the CFTC alleges the two firms: unlawfully solicited and accepted more than US$1 million from at least 50 U.S. customers to trade off-exchange binary options contracts; defrauded those customers by misrepresenting the likelihood of losing money in this sort of trading; and operated as derivatives trading firms with registering.
The allegations have not been proven in court.
The CFTC is seeking disgorgement, monetary penalties, and market bans.
Earlier this month, the CFTC and the U.S. Securities and Exchange Commission settled allegations against another binary options firm that saw US$9 million returned to investors.
In each of the cases, the CFTC noted that it was assisted by the Ontario Securities Commission (OSC), along with regulators in Israel and Cyprus. Various regulators in Canada have issued numerous warnings about binary options trading.