CentralOption continues soliciting Canadians, fraud investigators included

CentralOption continues soliciting Canadians, fraud investigators included

- in All News, Regulation, Warnings

CentralOption, a binary options broker based on the Marshall islands and in London, obviously chose to ignore British Columbia’s Securities Commission (BCSC) warning and continues soliciting Canadian residents.

On the evening of April 11, however, it made the mistake to call the Manitoba resident Jason Roy – an employee of the Manitoba Securities Commission (MSC) and member of a Canadian Securities Administrator’s (CSA) commission investigating binary options fraud.

According to the MSC statement, Roy got an unsolicited call from CentralOption and started a conversation with a self-described expert on binary options trading. “I grabbed my notebook, and after confirming some details with an operator, I was connected to an individual identifying himself as Sean Bessi,” said Roy. “Bessi started to pitch me on the exact sort of illegal investments I’ve been investigating for the past two years. It was a bit surreal.”

Bessi told Roy he was working from a CentralOption office in Toronto and claimed the company also has offices in London and Hong Kong. He also told the investigator that binary options trading was “very safe” and “not gambling” and the would not have to pay taxes on any earning he makes through binary options trading. Bessi offered a free education package and a $100 credit to do some test trading and repeatedly suggested Roy fund his account with his credit card or by wiring some money.

The MSC has confirmed that CentralOption’s office in Toronto does not exist and the phone number is a VOIP number that forwards the call outside Canada.

The Manitoba watchdog notes that only in the last two months residents of the province have reported losses of $160 000 to unregistered offshore binary options brokers, but the sum may be higher due to unreported cases. Recently the MSC told the story of an old lady who lost all her savings of $28 000 to the unregistered Iseebinary.com binary options broker.

Binary options are a type of financial instrument very much akin to gambling. The “investor” bets on random events such as whether the price of a financial instrument will go up or down or whether it will reach a certain price within a very short period of time. It is an all or nothing proposition and the “investor” could lose a large sum very fast.

Binary options are usually offered in the portfolio of forex brokers, but there are companies who offer only trading in binary options. Some of them are properly registered and regulated, but many are rather shady affairs operating out of offshore zones, soliciting unsuspecting individuals and often swindling them out of large sums.

For this reason US only allows trading in exchange traded binary options, which are tightly regulated and less risky, while recently the Cyprus Securities Exchange Commission (CySEC) has introduced some new rules for binary options brokers.

Although binary options trading is not explicitly illegal in Canada, the CSA has warned that there are no registered binary options in the country and investors should be extremely cautious.

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