Are we on the verge of a major crackdown by the US federal authorities against the binary options industry? Recent reports by several sources in the industry suggest so.
Finance Magnates recently learned that over the next few days, perhaps even as soon as Wednesday, several binary options brokers, affiliate agencies, payment service providers, and other providers assisting the industry offering services to US citizens, are about to indicted over charges of illegally marketing binary options to US citizens.
According to sources familiar with the matter, there are more than a dozen of suspects who are going to be named for breaching the US federal laws.
These actions are apparently part of an ongoing low-key investigation by the US Commodity Futures Trading Commission (CFTC) and other US regulators, that is about to become public and was kicked off by the arrest of an affiliate marketer by the name of Michael Shah.
Traffic for brokers
The origin of this anticipated raid on the industry is a set of evidence, gathered during legal processes against affiliate marketers, providing services to binary options brokers working in the US.
One of those cases is a scandal that unfolded in July of last year, when the CFTC charged Jason B. Scharf, a Californian resident, for operating a set of binary options schemes and illegally collecting a total of $16 million.
According to the charges, Scharf colluded with a Jacksonville, California-based affiliate marketing company called Zilmil, headed by Shah. According to the allegations, Shah provided traffic to binary options brokers like citrades.com and to campaigns like “Millionaire Money Machine.”
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In a correspondence between Shah and his colleagues, obtained by the CFTC with court subpoenas, he allegedly wrote about his wrongdoings in a surprisingly honest manner, admitting his actions were “a scam,” and pure “BS.”
According to a recent report, the CFTC has frozen or withdrawn almost $8 million from Zilmil’s funds. A move to which Zilmil objected saying he and his partner did not violate any law, stressing that such practices are common and legal outside of the CFTC’s jurisdiction.
During his investigation and as a result of the legal process (which is still ongoing in the Florida Middle District Court), Shah is rumored to have shared a lot of information on his practices, and more importantly – his counterparts.
In another case against a binary options broker who was accused of similar wrongdoings, the CFTC has reportedly retrieved an internal correspondence, with alleged evidence of interfering in their clients’ trade transactions, and targeting of “successful traders.” Moreover, the indictee apparently named a few prominent binary options technology providers.
Lee Elbaz arrest
According to the sources, this information has already led to several legal actions, most notably the arrest of Lee Elbaz, the CEO of binary options technology provider Yukom, in New York in September of last year.
Apparently, this move was only the tip of the iceberg, compared to what is anticipated to happen this week, as the persistent rumor is that dozens of indictments are imminent.
Finance Magnates will keep updating on the matter.