Unlike stock options, which are highly regulated and perfectly legal investment
options, binary options come with far more risk and far less regulation.
While a number of these options are traded on designated contract markets
or are listed on registered exchanges, a large percentage of them are
offered through websites that fail to comply with U.S. regulations. In
fact, many of these websites are used as vehicles to commit fraud by criminals
living outside of the United States.
What is a Binary Option?
Binary option payouts are entirely dependent on the outcome of a yes/no
proposition that is usually tied to whether or not the price of an asset,
like a commodity or stock, falls below or rises above a specific amount.
Unlike a more traditional stock option, you aren’t actually buying
the commodity or stock, you’re simply betting on whether its price
will fall within a certain range after a specific amount of time. While
this isn’t necessarily fraud on its own, many of the people who
run binary options websites are criminals who live outside of the United
States and only operate these sites to steal money. The three most common
complains the FBI has received about these operations include:
Manipulation of Trading Software: A number of these online platforms may alter their algorithms in an attempt
to generate losing trades on purpose, and may distort payouts and prices.
One example of this is to extend the expiration on winning trades just
long enough for the trade to become a loss.
Refusal to Reimburse or Credit Customer Accounts: This can occur in a number of different ways, including accusing the customer
of fraud, freezing accounts, ignoring customer emails and phone calls
and cancelling withdrawal requests.
Identity Theft: Some sites may claim that the government requires photocopies of personal
data, including but not limited to your utility bills, driver’s
license, passport, credit card, etc. This information is often used to
steal your identity.
Binary option websites often go to great lengths to draw in new investors
by advertising on a number of platforms, including through spam emails,
message boards, legitimate trading websites, social media sites, etc.
They usually promise excellent customer service, low risk options and
easy money. A number of potential investors are also
targeted though boiler room scams.
If you were the victim of fraud after investing in a binary option website,
you may be able to file a lawsuit in order to recover compensation. Contact
our attorneys at Meyer Wilson today to discuss your case by either calling
us at one of our four locations, or by
filling out our online form to request a free case evaluation.