I have always prided myself as a very careful person who would never fall for a scam. Even one of my mottos was “Only the greedy get scammed” but alas! Now it has happened to me. Despite all my carefulness and background checks, they still took my $7500. After I already made plans to take my girl shopping and ball my guys over the weekend.
It all started that very unfortunate day, with me stumbling on Binary trading online. Very easy trading, as the name suggests, binary! Either 0 0r 1, Either Yes or No. This particular one that made me lose my money was Binary Option, which happens to be a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition, typically related to whether the price of a particular asset—like a stock or a commodity—will rise above or fall below a specified amount. Unlike regular stock options, with binary options you’re not being given the opportunity to actually buy a stock or a commodity—you’re just betting on whether its price will be above or below a certain amount by a certain time of the day i.e a binary option does not give the holder the right to buy or sell the specified asset. When the binary option expires, the option holder receives either a pre-determined amount of cash, should they get it right, or nothing at all if otherwise.
For example, You expect the price of an individual stock will be above $80 at 3:30 p.m. today. So, you buy a binary option that allows you to place this bet at a cost of $60. If at 3:30 p.m., the stock price is $80.01, your payout is $100, for a profit of $40. If the price of the stock at 3:30 is $79.99, you lose $60. Of course, you can buy multiple binary options, which can significantly increase your winnings as well as your losses.
Unknowingly to me, just like other budding platforms, businesses or financial instruments where scammers keep finding ways to take advantage of unsuspecting victims, Binary Options had also been invaded. Just as we have seen many scammers invade the Crypto space in the name of honest trading by taking money and not crediting the buyer’s wallet or taking cryptocurrency and not making payment. With Binary Options getting popularity among traders worldwide, unscrupulous elements have also sought ways to take advantage of it by using it to defraud other people.
I decided to go again after my first binary options trade yielded a loss and funny me thought I was now $5,000 richer. It was after several emails to them to credit my account with my gains, that I realized I had been hoodwinked, defrauded, and scammed. A whole me!
After this painful moment, I put further keywords in my search and realized that these scammers have taken money from a lot of people. The scammers go at great lengths to recruit investors( prospective victims). They advertise their platforms often on social networking sites, various trading websites, message boards, and spam e-mail with big promises of easy money, low risk, and superior customer service. Many of the scam perpetrators behind many of the binary options websites, are only interested in one thing—taking your money.
Complaints about their activities generally fall into one of three categories:
Refusal to credit customer accounts or reimburse funds to customers:
This is usually done by cancelling customers’ withdrawal requests, ignoring customer phone calls and e-mails, and sometimes even freezing accounts and accusing the customers themselves of fraud.
The scammers may falsely ask for copies of your credit card, passport, driver’s license, utility bills, or other personal data under the guise of registration or withdrawal of profits or other unspecified uses. Never provide your personal data.
Manipulation of trading software to show trade losses:
Some of these Internet trading platforms may be reconfiguring the algorithms they use in order to purposely generate losing trades, often by distorting prices and payouts. For example, if a customer has a winning trade, the expiration time is extended until the trade becomes a loss.
WHAT YOU CAN DO TO AVOID FALLING A VICTIM
- Make sure that the binary options trading platform you’re interested in has registered its offer and sale of its products with the SEC. (Registration provides investors with key information about the terms of the products being offered). To do this, you can use the Security Exchange Commission’s (SEC) EDGAR Company Filing website.
- Check to see if the trading platform itself is registered as an exchange at the SEC’s Exchanges website.
- Ensure that the trading platform is a designated contract market by checking the Commodity Futures Trading Commission’s (CTFC) Designated Contract Markets website. Thousands of entities promote binary options trading in the U.S., but only two are currently authorized to do so by the CFTC.
- Check out the registration status and background of any firm or financial professional you are considering dealing with. You can do this through the Financial Industry Regulatory Agency’s BrokerCheck website and the National Futures Association Background Affiliation Status Information Center.
- Take a look at the CFTC’s RED List, which contains the names of unregistered foreign entities that CFTC has reason to believe are soliciting and accepting funds from U.S. residents at a retail level for, among other things, binary options.
- Finally, don’t invest in something you don’t understand. If you can’t explain the investment opportunity in a few words and in an understandable way, you may need to reconsider the potential investment.