Banc De Binary, a binary options broker regulated by the Cyprus Securities and Exchange Commission (CySEC) has released a public statement warning the “unsuspecting traders” to beware of “fly-by-night brokers” attempting to lure them.
In the message, which can be broadly described as a case of “the pot calling the kettle black”, the broker, which just recently lost its Belize license and is this year’s undisputed champion among the binary options brokers with a $11 million fine for scamming US citizens, warns of the dangers of trading with its unregulated peers.
The main danger, according to Banc De Binary, is that when trading with them, “in the event of a winning trade there is almost a 100% chance that the funds will not be paid out”. Another risk is the rigged trading platforms used by the unregulated binary options broker that are working to their advantage, or are “alternatively engineered to purposely cause the trader to lose their investment”.
Banc De Binary also notes that unregulated binary options brokers devise marketing schemes to lure traders and use language promising or guaranteeing profits, but considering the aforementioned, there is only guarantee of loss.
The broker also points out that regulated companies are required to hold clients’ funds in segregated accounts, while unregulated brokers do not and employ “sham withdrawal practices”.
In all fairness, Banc De Binary notes that even when trading with regulated brokers, there is no guarantee of profit and online trading carries an inherent degree of risk. In conclusion, the broker urges all traders to verify the authenticity and regulation of brokers.
While all of the Banc De Binary admonitions are absolutely valid and are the same made by financial regulators across the world, it is also true that the broker itself is often employing unfair practices.
There are numerous complaints against the broker, going along the lines of “I deposited a small amount, then got a call to deposit more with a promise of big gains. When I tried to withdraw my money, they refused/lost my money in trades/paid back much less than expected because of their “policies””.
Considering that Belgium and Israel have already banned binary options trading, Germany is planning to do so, while France and Netherlands are in the process of banning advertising and Denmark has warned of the risks, perhaps the safest thing to do is to never start, even with a regulated binary options broker.