Banc de Binary is Closing Down Due to Regulatory Pressures in Isreal

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Banc de Binary is Closing Down Due to Regulatory Pressures in Isreal

By Adam Teen | Thursday, January 12th, 2020

One of the biggest and popular binary option brokers, the Isreal based Banc de Binary has announced today that it is gradually closing down its operation.

There has recently been a lot of negative press coverage about binary option brokers operating in Isreal. Some have deemed the country a wild west for financial service providers. This and other issues have caused the Isreali government to clamp down on brokers operating in regions under their control. Although Banc de Binary is registered in Cyprus it’s operations were conducted in Israel.

To address this issue, Isreal’s securities regulators began to work very closely with their counterparts in the USA and Europe to investigate leaks and complaints made against brokers operating in Isreal.

Banc de Binary has claimed regulatory pressures as the main cause of winding down. As stated by the broker’s official spokesman, Banc de Binary will now be gradually closing down its operations and all clients are advised to withdraw money from their trading accounts.

This shouldn’t be a huge surprise to those who followed this broker’s track record. Last year Banc De Binary had to pay $11 million in penalties to the United States government last year because they have allowed American investors to sign up and trade. It was claimed they have done it illegally and they had to pay restitution fees.

There are many Isreali firms supporting the binary options industry. It’s a multi-billion industry in Isreal. In addition to binary brokers there are also many binary platform development firms, data centers and call centers and although it is currently illegal to offer binary options services in Isreal there is no law against selling them abroad.

However, this can soon change as the Isreali regulators are looking at ways to ban companies from selling binary options abroad as well. If this gets approved by the government we might see more closures of binary brokers on the way.

If you traded with Banc de Binary please share your experience below.

Banc De Binary Shuts Down Operations Over Regulatory Pressures

Banc De Binary, a major online trading firm dealing with binary options recently announced that it is winding up operations. The Cyprus-registered but Israeli owned company has cited regulatory pressures for its closure. The company allows investors to bet on short-term price shifts in financial assets through binary options.

In a statement Banc De Binary, said

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Banc De Binary will be gradually downsizing its operations due to regulatory constraints. For clients that have eligible funds in their account, we are encouraging them to withdraw the remaining balance

The company has had to pay $11 million as penalties in the United States with respect to charges filed against it for illegally enabling U.S. residents to invest on its site. Banc De Binary is not the only company to have been put under the scanner. Reportedly over 100 such firms are operating from Israel and the entire industry has come under scrutiny.

Shmuel Hauser, chairman of the country’s regulatory body, Israeli Securities Authority (ISA) recently stated that he was working with regulators from Britain, U.S., France and Belgium to examine charges that Israeli companies were illegally selling risky financial products to international customers.

A Reuters report released in September 2020 revealed the full extent of their operations and also highlighted allegations made by several investors through their lawyers of being duped by the firms. Among other things, the customers accuse the firms of transferring money between accounts without approval and preventing them from withdrawing funds from their accounts.

Last week the ISA took formal action for the first time against a binary options firm by sending a warning letter to Fairtrade, a binary options peer to peer (P2P) exchange for operating an unauthorized exchange. The binary options industry has been grown rapidly in the key markets of China, United States, Japan and Europe. According to two Israeli firms specializing in trading platforms, they work with online brokerage firms who handle combined trades worth $8 billion per year.

Operating through smartphone apps, the companies have been able to attract a wide swath of investors who are not professional traders which increases the risk attached to such transactions.

Regulatory body Hauser has banned firms from selling binary products within Israel and has requested the country’s attorney general to amend existing laws to ban companies from selling overseas as well. A draft legislation for the same is said to be in the works and is likely to be ready within a few weeks’ time.

Binary options firm Banc De Binary says winding down operations

TEL AVIV (Reuters) – Banc De Binary, one of the biggest and best-known providers of online trading in binary options, which allow investors to bet on short-term moves in financial assets, said it is winding down its business, citing regulatory pressures.

“Banc De Binary will be gradually downsizing its operations due to regulatory constraints,” the Israeli-owned and Cyprus-registered company said in a statement emailed to Reuters.

“For clients that have eligible funds in their account, we are encouraging them to withdraw the remaining balance.”

Banc De Binary paid $11 million in restitution and penalties in the United States last year over allegations it had signed up U.S. investors illegally.

Israel’s chief securities regulator Shmuel Hauser said in November he was working with authorities in the United States, Britain, France and Belgium to investigate complaints against Israeli firms selling the risky online options internationally.

More than 100 such firms are estimated to be working in Israel.

Hauser said the scale and reach of the online binary options business meant regulators must coordinate more closely.

A Reuters special report published in September shed light on the extent of the industry and accusations by clients of London-based lawyers who say they have been duped out of vast sums of money by some Israeli firms.

While the industry markets itself as a legitimate investment, clients of some firms say they are little more than high-pressure scams. They accuse the companies of transferring money between accounts without approval and in some cases of preventing them from withdrawing funds.

Because they are based online and allow trading from smartphones or tablets, the industry has attracted a vast number of users who are not professional dealers.

Binary options usually involve betting on whether individual shares, indexes, currencies or other securities will go up or down in a given period of time. The time for the option to “mature” is short – as little as a minute.

The industry is growing fast, with trading in binary options soaring over the last decade in China, Japan, the United States and Europe. Two Israeli trading platforms that supply technology to online brokers say they handle a combined $8 billion in volumes annually.

Securities regulator Hauser banned companies from selling binary options in Israel in March and has asked the attorney general to consider changing the law so he can ban Israeli companies from selling binary options abroad.

Officials told a parliamentary hearing last week that draft legislation allowing him to do that will be ready in a matter of weeks. An Israeli parliamentary committee that oversees government is expected to meet again on the issue in February.

Reporting by Tova Cohen; Editing by Catherine Evans

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