April 30, 2019 | AtoZ Markets A federal court in Florida has recently fined an online binary options’ marketer $22 million for defrauding his American victims through the internet and violating the Commodity Exchange Act.
Michael Shah, US-based binary options operator, through his company Zilmil, Inc. was said to have used websites based in Israel for serving his scam.
Shah, had worked in tandem with call centers in Israel in for large commissions in return.
He also sent traffic to websites trading binary options, including Banc de Binary, TraderXP, LBinary, Trade Rush, and OptionRally.
The US Commodity Futures Trading Commission, which announced the court’s decision yesterday, had been pushing for a heavier penalty for the defendants up to $75 million.
Observers say that this is the highest fine the US authorities have imposed against binary options operators until now.
Extremely lucrative binary option scam
In the details of the news, the courts’ filing unveiled that Shah and his company Zimil Inc. played “mastermind of an extremely lucrative Internet scam involving so-called binary options.”, and even though he knew the trading systems he was promoting for were fraudulent, he and his company willingly opted for continuing the promotion activities, as the chat and messaging records showed during the investigations.
Shah and his marketers “constituted unlawful off-exchange options.”, as per the court, and that is due to the fact he and his marketers were not registered as a “designated contract market, exempt board of trade or bona fide foreign board of trade,” in the United States.
According to the CFTC: “The defendants sent more than 60 million mass emails to more than 1.4 million unique email addresses in just one seven-month period. The emails contained false and misleading statements about the performance of the trading systems – for example, that customers could make “millions” with the systems. During the Relevant Period, the defendants made more than $17.8 million from the sale of its autotrading systems and commissions from the binary options websites.”
It is worth reminding that most financial watchdogs have banned trading binary options.
The EU regulator, ESMA, has been renewing its ban on the binary options every three months, for a considerable whole today, while its UK counterpart has recently banned it permanently.