Monday, April 11, 2016

2,500 victims of binary options fraud to sue in London: Many of the scammers are alleged to have ties to Israel

International lawyer Gabriele Giambrone last week sent a letter to Israel’s Justice Ministry informing it that his firm represents 2,500 clients allegedly defrauded by binary options and forex companies. Many of these companies operate from Israel, he wrote, and pleaded for Israel’s help in bringing them to justice. 

The Israeli regulatory and enforcement authorities have so far failed to take any action,” the London-based lawyer wrote in the April 5 letter, “despite the widespread knowledge of where these companies are based, which offices they are operating from and who are the individuals behind it. It appears that none of the regulators are interested, so investor protection falls down the chasm between the net.” 

In fact, as The Times of Israel reported last month, for almost a decade Israel has played host to the activity of an online trading industry, a great deal of it fraudulent, that has fleeced hundreds of millions of dollars, possibly billions, from hundreds of thousands of customers globally, while Israeli authorities have opted to look the other way. [...]

What happens if not just a handful of Arab clients, but thousands, tens of thousands, or hundreds of thousands, realize they were defrauded by people calling from Israel?

“It’s certainly not good for Israel,” said Gadi Wolfsfeld, a professor of political communication and hasbara (public diplomacy) at IDC-Herzliya. However, he added, from a diplomatic point of view, most Jews and Arabs think whatever they think about the (Israeli-Arab) conflict and a single event will not change those views over the long term. [...]

For his part, Giambrone said that the fact that so much alleged fraud is being traced to Israeli individuals is “putting a bad light on Israeli industry worldwide.”
“Israel used to be known as the startup nation,” he said. “Now its reputation is being tainted by the fact that there are a number of crooks using Israeli IT ability to create very pretty fake websites, using SEO (search engine optimization) and Google to target victims into thinking they are doing legitimate trading.”

Giambrone said that aside from salaries, he believes much of the ill-gotten gains of fraudulent forex and binary options companies never enters Israel but is siphoned to offshore companies.


  1. So China can launch cyberwars against everyone, undermine currencies and threaten war as a matter of state policy but if some freewheeling Israeli traders went rogue, hey blame the Jews. Funny world, isn't it?

  2. Same tactics used by cable, cell phone (and regular phone) companies, among many others, in the US.

    Only here, the stakes are higher.

    Also, the TOI and the lawyers (might) have a conflict of interest, in reporting on a story they have a financial interest in.

  3. Jews are not as powerful as China. If they were, Israel would be left in peace at the UN.

  4. What happens if not just a handful of Arab
    clients, but thousands, tens of thousands, or hundreds of thousands,
    realize they were defrauded by people calling from Israel?

    Can't imagine they'll hate us any more than they already do. That doesn't excuse the chilul Hashem, though.

  5. Regulators exist (in part) to ensure the integrity of the marketplace. With this much money involved, I think there's reason to suspect the lax enforcement by Israeli authorities has a darker reason behind it.

    But to use the Chinese as an analogy? Really? Who should we model our business affairs after next? Stalin?

  6. This seems to be a bet, not a (derivative) security. As such, there is no regulation. (At least not in the US.) (And even in the US, if its disclosed (in the fine print, as discussed in the article), little recourse.)

  7. I wasn't actually referring to the dopes who were duped.

    There's indications that this scandal may have broader implications for Israeli business. If so, one would hope the government would take a keen interest in protecting (as I said) the marketplace.


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