Beginning of the End for Binary Options

January 26th, 2017

SHARE

Beginning of the End for Binary Options

The closing of Banc De Binary earlier this month has brought renewed attention to an industry that has been under ever-increasing scrutiny for much of the past year, that of binary options "trading". Far be it from us to revel in the demise of another’s company, but this closure can only be seen as a good thing for a number of related industries, including online gaming.

Binary Options Trading is NOT Gambling

Binary options trading has been equated with gambling time and again in articles about the industry, many times being outright and explicitly called as much. While it is easy to see why that comparison is made, it does a major disservice to the gambling industry, which is regulated and subject to governmental authorities to ensure fair play and protect players.

Surprisingly, up until a 2013 reclassification and shift to their Financial Services Authority, Malta - one of the largest issuers of gaming licenses on the planet - actually required binary options trading companies to register with their Lottery and Gaming Authority, similar to online gambling sites. But, under authority of the reclassification, this practice has since halted.

The many recent stories and revelations about binary options trading show it to be more akin to out-and-out fraud, or any number of standard confidence schemes that are rigged against the mark.

How Binary Options Trading Works

Here, now, it would probably be worth a simple explanation of how these trades work. Customers (gamblers) make an "investment" (bet) that a given financial indicator, like the price of gold, will be either above or below a certain amount after a fixed amount of time. These deadlines can be as little as 60 seconds later in some cases.

If the customer is correct, they receive their initial investment back plus an additional 60% - 80% of that investment, but if they are incorrect they lose it all (this all or nothing setup is why the word binary is used to describe these options, as there are only two outcomes available).

Were this the extent of the system it would still be a horrible way to make money for the customers as the massive built-in house edge means users would need to be correct at least 55% of the time on systems that are incredibly difficult to predict in the short-term just to break even.

What Makes Binary Options Trading a Scam

But on top of that edge, the binary trading firms such as Banc De Binary use "independent" platforms to determine the prices of the indicators being invested in, and they are not afraid to manipulate them to ensure their customers lose. One former industry worker has described a colleague devising one such platform and being asked to build a backdoor into it that the firms could access to control outcomes.

Such backdoors and workarounds already exist on the most popular options platforms used by these firms, and it is not unusual for deadlines to be altered to give time for a more favorable outcome for the firm to emerge, or for the firm to decide that results from a time before the divestment deadline are the "true" and "official" ones. These systems have been compared to a casino rigging the roulette wheel so it always lands in their favor.

Why Binary Options Trading Still Exists...For Now

While that analogy makes understanding how these trading firms cheat their customers easy, it also illustrates how different they are from gaming companies thanks to the lack of strict regulations that allow them to conduct their crooked business unabated.

Were word to get out that just one casino was operating a rigged roulette wheel they would be shut down immediately and all of their competitors would be subject to intense scrutiny and testing to ensure they meet established standards of fairness.

When it comes to binary options firms it is common knowledge thanks to multiple former industry workers that the system is gamed against the customers, and still no action is taken to stop them from brazen theft.

How Does Binary Options Trading Trick Customers?

Perhaps the worst part of this system, and something that is truly alarming, is how binary options are presented to unsuspecting marks. Because this industry lives and operates from the shadows, the general public knows little about it, and as a result options brokers are able to falsely present themselves and their business as a legitimate, low-risk investment enterprise instead of a high-risk proposition bordering on a straight-up con where one side is set up to fail.

Nations like Cyprus agreeing to "regulate" them under the financial arm of their government obviously adds legitimacy to those claims, making it incredibly easy for these firms to prey on people who don’t know any better and frequently can’t afford to lose what little money they already have.

The poor and struggling are among the most favored targets of these brokers as they are able to put visions of huge, life-changing gains and financial freedom in the heads of these potential customers, and being able to call themselves and their industry a legitimate financial and investment instrument is a massive boon when it comes to swindling these desperate people.

Who's Trying to Shut Down Binary Options Trading?

That is part of the reason the only way any of these firms have actually gotten in trouble or faced official consequences is by targeting customers in countries that have outlawed these types of trades, such as the United States. In the last five years Banc de Binary had to pay $11 million in settlements to the US government for targeting US-based players through avenues such as YouTube, email, and social media.

While it is encouraging to know there are nations that have laws against targeting their citizens with this corruption and a willingness to prosecute these firms, it is disheartening that these systems still exist in any form that allows them to target the citizens of any country at all.

The overwhelming evidence available leaves only one conclusion when it comes to binary options trading: it is a massively corrupt industry designed to separate innocent people from their money while remaining couched in a fraudulent veil of legitimacy bestowed by the involvement of flimsy regulatory bodies.

What the Firms are Really Telling Their Employees

Some of the most in-depth reporting has been done by The Times of Israel, starting with their excellent article "The Wolves of Tel Aviv". That article recounts a number of shocking improprieties undertaken by binary options trading firms that have come to light, including:

  • Telling new employees to "Leave [their] conscience at the door."
  • Telling brokers to create fictional names, locations, educational histories, and financial backgrounds for themselves to use while communicating with customers.
  • Withholding the surnames of management personnel, making it impossible for high-turnover, low-level employees to name their bosses later.
  • Masking their locations behind VoIP technology, making customers that they call believe firm representatives are locally-based instead of in a different country.
  • Reciting to customers, word for word, Leonardo DiCaprio’s phone sales pitch from "Wolf of Wall Street," which, aside from being incredible cliché, indicates that the broker in question either missed or misunderstood large portions of that film.

And those are just the smaller scale wrongdoings. The worst actions taken by these companies include asking for remote access to a customer’s computer to install trading software then abusing that trust and sharing permissions to scour a user’s desktop for pornography or similar indicators of compulsive behavior, making (losing) trades on a user’s account without their permission or knowledge, and refusing to pay out to players requesting a withdrawal, even going so far as to block their phone numbers and Skype accounts to cut off contact.

And remember, firm representatives use fake identities to communicate with their clients, making it impossible for aggrieved users to track down the real thieves. It is a gamed system, one that promises low risk, which is true inasmuch as those ensnared by the siren song of life-changing riches are almost guaranteed to lose everything they put into these trades.

Binary Options Trading Must Be Stopped

That is why it is important to shine a light on what is happening here, and that is why it is a good thing that Banc de Binary has shuttered. It will be even better if that is the first domino to fall in this insidious industry. And no, binary options trades aren’t gambling, as legalized gambling is extremely well-regulated to ensure the utmost standards of fairness are met.

Binary options are rigged, a system that only works because customers are set up to fail to such a degree that succeeding is at times literally impossible. Players can actually win when gambling, but they’re guaranteed to lose with binary options. So while trusting binary options firms and the binary trading industry are major gambles, they aren’t really gambling.

Casino News Articles


Evolution to Launch Biggest Live Casino Progressive Jackpot
Evolution to Launch Biggest Live Casino Progressive Jackpot

In the ever-competitive world of online casino gaming, we all know that size matters. To help distinguish themselves from the competition, casino brands are hiking up their jackpot prizes so it's no s ... Read More

Player Wins £1.36m Progressive Jackpot on 25p Mobile Spin
Player Wins £1.36m Progressive Jackpot on 25p Mobile Spin

One triumphant player spinning from her mobile device managed to win £1.36 million from a single bet on Playtech’s popular Gladiator slot. The player won a grand total of £1,365,870 after making an in ... Read More

Yggdrasil Earns Slot Provider Honors at EGR B2B Awards 2017
Yggdrasil Earns Slot Provider Honors at EGR B2B Awards 2017

Swedish games developer Yggdrasil has come up trumps, taking the honours in the 'Slot Provider of the Year' category at the 2017 EGR B2B Awards. The achievement is doubly satisfying as Yggdrasil won i ... Read More

Unibet Big Dubai Summer Casino Series Offers €50,000 Prize
Unibet Big Dubai Summer Casino Series Offers €50,000 Prize

Looking to prove yourself on the blackjack tables? Maybe hone your live-dealer roulette skills? Well Unibet Live Casino has you covered with the Big Dubai Summer Casino Series, a €50,000 online casino ... Read More

Life-Changing Mobile Progressive Jackpot Wins on the Rise
Life-Changing Mobile Progressive Jackpot Wins on the Rise

Mobile casino sites, dedicated casino applications and even mobile-first casinos are taking the web by storm in 2017 as mobile devices engulf an even larger portion of our attention. This growth in mo ... Read More

Mobile-First Online Casinos Take iGaming Center Stage in UK
Mobile-First Online Casinos Take iGaming Center Stage in UK

Mobile technology is affecting every industry these days, especially iGaming in the UK. First, online casinos developed mobile-friendly sites, then came dedicated mobile applications. Now, we have "mo ... Read More

Casino Navigation

Newsletter

Sign up for the free Gambling.com Newsletter to stay on top of all the best bonuses!
We will never share or misuse your personal information. Privacy Policy

Latest Casino News

CasinoGuides

Country Guide