Ever heard of binary options? For those who have, you must be familiar with the information stating that it’s an easy way of making money online. All you need to do is register on the company’s website or app, convert your local currency into dollars and begin trading with as little as $1. To begin trading, all you need to do is guess when a currency rises or falls, and presto! You start earning money. You are even given the opportunity to try out on a free demo account in order to sharpen your ‘trading’ skills. You’ll also be told by the operators that binary options is a simpler form of Forex trading which enables you to trade with the world’s leading currencies including cryptocurrencies. But guess what? Most of these are nothing but scams! Those flickering green and red candles or lines indicating currency movements are just video games which can be manipulated by the owners of the binary options.
A Personal Experience
Two years ago, I fell for these online traps hoping to cash out big time. I had dedicated three months to studying and playing these fraudulent schemes. In the end, it finally dawned on me that these were nothing but online scams. I could feel a calculated and deliberate ploy to create a loss by their system.
True to my perception, I ended up losing around fifteen thousand naira. My annoyance was the sheer waste of time and effort in learning how to trade on their trading platform – for three months!
What makes binary option fraudulent
Many binary option “brokers” have been revealed to be fraudulent with no real brokerage. Victims end up betting against the broker who manipulates price data with the inevitable loss by the customers. Withdrawal of funds usually ends up becoming impossible through stalling or outright refusal by the operators.
On 29 March, 2018, the UK’s financial watchdog, the Financial Conduct Authority (FCA), banned the sale, marketing and distribution of binary options to all retail customers. The United States, Israel and many other countries have also banned binary options.
How Binary Options Commit Fraud
It must be stated clearly at this point that binary options on its own is not fraudulent. It’s like saying Insurance scheme on its own is fraudulent. The brokers are the ones who perpetrate the fraud.
Many brokers operating binary options are not regulated. Others who cannot operate legally in a country simply use offshore companies.
In many parts of the world, trading binary options is illegal just like gambling. While countries without legislation on binary options become territories for brokers to profit from people’s desire to make quick cash. The result of this is the explosive rise in binary options scams.
The plain fact is that very few of the brokers are legit. Sometimes the problem also comes from inexperienced traders who have the impression that ‘real’ binary options is an easy way to trade.
Traders, who are serious about ‘real’ binary options, must know one thing in advance: a broker must be regulated. The broker gets a license number from a financial authority and is given strict regulation which the broker must follow when doing business. The threat of losing his license if found guilty keeps him on the straight path. But, regulation is quite expensive. So, shady brokers register their company in an offshore environment without any regulation by a financial authority. This makes it easy for such crooked brokers to scam people.
Watch the video below on how binary options scam people.