SpotFN and Binary FN Boss Extradited to the US, Faces Wire Fraud Charges

David Butler, the mastermind behind a $5.8 million binary options scam, has been extradited from Costa Rica to the United States last Thursday to face charges of conspiracy to commit wire fraud. He was arrested in Costa Rica last April.

If convicted of the charges, he could receive a prison sentence of up to 20 years.

Between January 2011 and October 2016, Butler, a US citizen, and his unnamed co-conspirators operated several binary options companies, including SpotFN, Binary FN and Janus Options. They ran the operations from Glen Cove, New York, Costa Rica and Kosovo.

Fraudulent Services

According to the court filings, the companies offered binary options to United States investors, promising predetermined profits for desired market outcomes. The operators even told inventors, via emails and phone calls, that the predetermined profits would be based upon the actual prices of the underlying assets to induce profits.

However, the binary options platforms controlled and manipulated the market data shown to the clients using computer software to benefit the platforms by offering skewed services.

The court order even highlighted that the operators of the binary options schemes inform the investors about the data manipulation and thus stole more than $5 million from binary options investors.

“Butler allegedly swindled investors out of millions by selling false promises and later manipulating the numbers to the investors’ disadvantage. His alleged involvement in this complex fraud scheme has now landed him back in the U.S. to face the consequences of his illicit acts. Butler may have sold predetermined profits that turned out to be a sham, but his criminal arrest and prosecution are as real as it gets,” said Thomas Fattorusso, New York’s Special Agent In-Charge for Internal Revenue Service-Criminal Investigation.

Binary options schemes are notoriously unpopular for frauds with market data manipulation. These investment instruments are banned across Europe and several other countries but are allowed in the US under heavy regulations.

Furthermore, the CFTC, the regulator of US derivatives markets, received a court order to impose more than $29 million in restitution and penalties to individuals and entities tied to another fraudulent binary options pool trading scheme.