The Israeli Supreme Court has upheld the decision to put an end to binary options in and from Israel once and for all.
Late last month, we reported on what could have been the last gasps of breath of the doomed industry, as individuals involved in it appealed to the court with a petition and impassioned pleas. In response, the court asked the country’s financial regulator (ISA) to justify its decision to completely ban the industry.
The decision has now been officially upheld, and the ban is to come into effect on the 26th of January. The court document states (translated from Hebrew):
“After reviewing the request for an interim order, the responses to the request and the answer on behalf of the petitioners, I do not believe that the conditions for granting an interim order under the circumstances were satisfied. Therefore, the request is denied.”
Binary options was once big business in Israel, employing almost 5,000 people over 70 companies and contributing 1.75 billion USD a year to the gross domestic product, according to research conducted by Finance Magnates.
However, the industry as a whole was more scam than legitimate. While some companies did operate above the board, the sheer number of complaints received by the authorities from people who had had their money stolen led the Israeli regulator to conclude that the industry was toxic, harming both the domestic financial market and the reputation of Israel abroad. “The sites selling binary options cause serious harm to Israel’s image, encourage anti-Semitism and have hurt Israel’s foreign relations,” said then-ISA chairman Shmuel Hauser.
Binary options involves betting on the movement of an asset, that is, whether the price will go up or down within a pre-agreed timeframe. Companies would take money from people very happily, but getting it back from them was another story entirely. Many companies would fiddle with market results on corrupt platforms, employ high-pressure sales tactics to badger people into continuing to trade, and, if all else failed, simply disappear with the money.
The petition against this decision, organised by businessman Yossi Herzog and technology provider Yukom, said: “The ruling that prohibits the management of trading arenas (platforms, brokerages) in the field of binary options contradict the foundation of freedom of employment. The Israeli regulator has disqualified an entire industry, which is recognized and regulated by many countries in the world, by using a personally identified correlation between a financial industry and a negative campaign that has been created against Israel, as the basis for his claims.”
Herzog added: “I hope that the Supreme Court of Israel will end the witch-hunt of exporters of technology and services, who are abiding by the laws of Israel. Over the years, they have supported thousands of families, and have provided an influx of billions of shekels in taxes to the government. The unrestrained slander of the Israel Securities Authority, which I and others like me are experiencing, does not distinguish between stray individuals and others who act in accordance with the law, which provides support to criminals and extortionists.”
Alas, the effort was to no avail.