The Commodity Futures Trading Commission (CFTC), the US financial regulator, announced that a US federal district court has unsealed a civil complaint of the Commission against two Israeli-based binary options brokers – VaultOptions (Vault) and GlobalTrader365 (GT 365). The CFTC claims the two companies have illegally solicited and defrauded 50 US customers of $1 million. Furthermore, VaultOptions and GlobalTrader365 do not have a registration as Futures Commission Merchants.
The CFTC complained that since at least October 2012 and continuing to present, the two companies operated websites for trading in binary options on forex pairs, commodities and stock indices. By US law such transactions must be carried out on a registered board of trade. Neither VaultOptions, nor GlobalTrader365, however, have been properly registered.
Worse still, the two brokers have cheated at least 50 US customers out of a total of $1 million. The scammers claimed the customer funds were insured against loss, made them pay additional fees before the initial funds could be returned and misappropriated customer funds.
An SMN check found that the website of neither of the two scammers is working. The search, however, returns numerous warnings and customer complaints in the period 2013-2015.
This is not the first case the CFTC has gone after an offshore binary options broker. Most recently Banc de Binary, a binary options broker regulated by Cyprus’ watchdog, the CySEC, has reached an agreement with the CFTC to pay an $11 million settlement for illegally targeting US citizens between 2011 and 2013.
Binary options trade is popular in the US, but only exchange traded binary options are allowed. The largest such exchanges are Cantor Exchange and Nadex .
Like the rest of the US financial services market, the binary options brokers are supervised by the CFTC and the Securities and Exchange Commission (SEC). Due to the restrictive US laws, the authorities are very strict and do not award licenses to offshore brokers. Some EU regulated and registered binary options brokers, however, take the risk and accept trade from US customers.