After we reported last week that the FBI had sent investigators to Israel as part of their ongoing fraud investigation of Lee Elbaz, former CEO of several Binary Options broker brands, Israel business news website TheMarker has reported that those FBI investigators last week raided the offices of leading Binary Options platform provider SpotOption.
Lee Elbaz was arrested last September in New York’s JFK airport after arriving on a flight from Israel, and has been held since under house arrest awaiting trial. Ms. Elbaz was a senior manager at Yukom Communications Ltd which has operated a number of brands over the years including BinaryBook.com and BigOption.com. She was detained because the companies she managed presumably broke US securities law by targeting and taking US clients. Her problems in the US could become more serious, which apparently is the target of the FBI investigators, if authorities are able to authenticate charges of wire fraud, in which the company supposedly conspired to defraud its clients. More on that can be seen in an article from Israeli financial news site Globes.
SpotOption was the Binary Options platform supplier to BinaryBook and BigOption.
According to TheMarker, the FBI investigators appeared unannounced at SpotOption’s Ramat Gan offices, collecting documents and connecting to the company’s computers.
SpotOption owner Pini Peter (pictured above) was quoted in a brief conversation with TheMarker, denying that the unannounced FBI visit was a ‘raid’ and stating that the company is law abiding and has been fully cooperating with the investigators. Excerpts from the conversation included (translated from the original Hebrew):
Pini Peter: It was not a raid, they came to collect documents, we cooperated with the FBI, and they got everything they wanted.
TheMarker: Did they interrogate the company employees?
Pini Peter: No. They connected to our computers and took the information.
TheMarker: Is this a joint investigation by the Israel Police and the FBI?
Pini Peter: No. The Lahav unit [ed. note: Israel’s anti fraud police unit] accompanied the FBI investigators as part of the existing cooperation between the authorities, and they made it clear to us on arrival that the Israel Police is not conducting the investigation.
TheMarker: You claim that the FBI did not raid the offices – but in practice they did not coordinate their arrival.
Pini Peter: It was indeed strange, since our US law firm cooperated and passed all the documents demanded by the FBI. But since we are law-abiding and have nothing to hide, we gave them all the information they demanded. They collected the documents and left.
Another interesting quote that Mr. Peter gave to TheMarker, which will be of great interest to people in the online trading industry was (again, translated from the original Hebrew):
We are already outside the area of binary options, and I am considering closing the company.
Israel’s new Binary Options law, passed by the Knesset parliament into law in October, actually comes into effect next week, unless a last minute appeal to Israel’s Supreme Court made by Ms. Elbaz’s former boss, Yukon Communications owner Yossi Herzog, succeeds in delaying its implementation. Assuming that there is no delay, companies such as SpotOption will indeed have to stop all Binary Options related activity – including the provision of platforms and services to brokers outside the country.
Some of SpotOption’s rivals have either shut down, left the country, or changed their activities to other areas. One of SpotOption’s main rivals in the ‘good old days’ of binary options, TechFinancials Inc (LON:TECH), has moved its Binary Options related activity out of the country, sold its broker arm OptionFair, and turned most of its money and energy into Blockchain related activities, such as the Cedex.com online diamond exchange which is getting set to launch an ICO.
According to reports cited by TheMarker, from the second quarter of 2014 through to the end of 2016 customers deposited $98.9 million with BinaryBook. The company reimbursed customers only $19.9 million over that period.
The original article in TheMarker.com can be seen here (in Hebrew only).