American regulatory agency for binary options, the CFTC, charged several US citizens for causing losses worth around $16 million for US citizens who traded binary options. The man from California was the owner of a network of binary affiliate websites, that promoted brokers who were not regulated and who were not supposed to accept clients from the United States.
Let’s remember, The United States has one of the strictest binary options policy, and it is very hard to get a license to operate in the US territory. Many brokers in the past experienced hefty fines and serious charges, so most of them voluntarily stopped accepting American traders.
The CFTC charge includes several companies: CIT investments, Brevspand EOOD, CIR Investments LTD, and A & J Media Partners, Inc. Federal court ordered freezing assets belonging to Scharf, Shah, and Zilmil. It is not excluded that even more companies are involved in binary options scams are sometimes hard to trace thanks to different offshore accounts in so-called tax havens.
They describe the case as a massive fraud that was organized in the United States of America and offshore countries as Bulgaria.
The great ‘game masters’ of this scam were Jason B. Scharf and Michael Shah, both from Florida, USA, who promoted unregulated binary brokers and unlawfully accepted $16 million through offering illegal binary contracts. One of the very few regulated binary brokers in the USA is Nadex. Read Nadex review.
Besides the companies that are already mentioned in this article, CFTC in their report accentuates the fact that they were also operating as Citrades, and AutoTradingBinary.com, brands that have been blacklisted by our team a long time ago.
CFTC report also explains how both men were operating without a proper CFTC license that is necessary for all FCMs (Futures Commodities Merchants) and CTAs (Commodity Trading Advisors).
According to James McDonald, from CFTC, they are putting a great effort to prosecute fraudsters and scam operators. He described how Scharf and Shah used many unethical methods such as downplaying the risk, fake testimonials, outsized profits to fraud 8,000 customers.
The scam started in 2014 or before. According to the report, Shah and Zilmil have operated binary affiliate websites that redirected traders towards scams operated by Scharf. Once the trader made the deposit, it was impossible to get the money back. CFTC now, besides the fine, also asks for the return of funds invested by traders, but we will have to wait until we see it happen.
Read full CFTC report.