Hundreds of millions of dollars is the estimated size of Israel’s binary options industry. The industry employs thousands of people, but corrupt practices were brought to light in March. Investors worldwide are being cheated out of millions of dollars, with the potential to ruin Israel’s reputation in the process.
The story of Dan Guralnek underscores the growing trend of binary options companies in Tel Aviv that have seemingly taken over the job advertisement space.
Guralnek moved to the city when he was 28 years old, working odd jobs before realizing that sky-high rents and cost of living was too high for his salary. “I was getting calls from binary options companies every day,” he stated.
Guralnek recalls entering the lavish office of his new employer and landing the job that opened his eyes to the scams and corruption of the binary options industry in Tel Aviv. “My salary was 7,500 shekels plus commission.” Clients from around the world were contacted by Guralnek and his coworkers in an effort to persuade them to invest in binary options. The “gamble” could net 30% – 80% of the money put down, or it could be lost.
Binary options are promoted as an investment, although it’s a gamble. Investments have the potential to make money over time, and while Guralnek is promoted as a “broker,” the client doesn’t invest in anything. Working more as a bookie than a broker, Guralnek’s training consisted of how to keep people on the phone, answer objections and make people feel uncomfortable.
Management told Guralnek “leave your conscience at the door,” a piece of advice that haunts him still.
Guralnek’s story is not unique, says FX Instruction, a company that offers arbitration for people that have been scammed in Tel Aviv’s binary option industry.
Israeli regulators have done little to put a stop on the illegal practices of the industry. Victims, normally from abroad, are coerced into making an “investment” through a series of tactics aimed at promoting trust and authenticity.
“I was told to tell people I worked for the Bank of Scotland,” says Guralnek. Voice over Internet Protocol technology was used to display local numbers to unknowing victims that believed they were investing through local brokers.
Withdrawals were tedious, according to reports with retention specialists calling investors. Clients that failed to continue investing and demanded withdrawals received emails stating that their accounts were suspected of fraud and their funds were frozen by the company. The company would often stop taking the calls of persistent customers, too.
The industry remains unregulated, with Israel’s forex and binary options industry estimate to be valued at hundreds of millions of dollars to over $1 billion US dollars.
French authorities teamed up with CySEC to tackle Forex and Binary options scams. Québec adopted binary option scam alerts as a way to help curb scams in the city. Reports from earlier in the month show 1 in 3 companies that have been blacklisted from the US commodities watchdog are Israeli.
Reports from April indicate that 2,500 victims of binary options scams took up lawsuits in London. Many of the claims originate from companies in Israel.
Victims pleaded with Israel’s Justice Ministry in an attempt to recoup money that was lost through fraudulent means. The Giambrone Law Firm in London is working on the behalf of 2,500 people that allege they’ve been defrauded through binary opt ions scams.
Israel’s Securities Authority is working towards measures to ban the firms from working with Israeli clients, but the authority has been slow to implement measures to curb the practice. Authorities also claim lack of authority to stop the fraudulent companies from working overseas.