The Securities and Exchange Commission today charged two Israeli men with operating a binary options scam that defrauded more than 2,800 US investors to the tune of $5 million.
The two defendants were named as Anton Senderov and Lior Babazara, who owned and controlled two binary options brands, LBinary and Ivory Option. Until recently, those two sites were operated from offices of LianTech Finance Marketing, Ltd in Ramat Gan.
The SEC said the brokers operated a call center in Israel that functioned as a “boiler room,” a type of fraud that involves cold calling potential investors offering to sell them exotic financial products.
The SEC’s complaint, which was filed in federal district court in the Eastern District of Washington, describes how most investors lost money, with some losing their entire savings after the brokers’ staff used fraudulent statements to induce them to invest. The regulator also said the defendants usually refused to allow these clients to withdraw their money.
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As was customary, LBinary and Ivory employees lied about their names, location, titles, experience, and the fact that they made profits when the traders lost their balance.
US continues crackdown on binary operatives
The two brands were mentioned earlier this year when the CFTC hit a binary options operator with over $22 million penalties for defrauding his American victims through numerous websites. A Florida federal court fined online advertiser Michael Shah and his company Zilmil, Inc. Shah, who worked in tandem with call centers in Israel in return for large commissions, sent traffic to binary options sites including LBinary, TraderXP, Trade Rush, Banc de Binary, and OptionRally.
The complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and a penalty.
Today’s action is the latest in the US crackdown on binary options operatives after a series of reports uncovered massive fraud in the shady industry that had been centered in Israel. In August, a federal judge convicted Yukom CEO Lee Elbaz of three counts of wire fraud and one of conspiracy to commit wire fraud in connection with the same case. Elbaz, 38, is scheduled to be sentenced on December 9 by a federal judge in Maryland.
Elbaz, who proudly called herself a “money-making machine,” trained employees to lie to investors and rig the odds against them, while falsely guaranteeing returns of up to 40 percent.