FBI Publishes Warning About Binary Options Fraud
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.