A U.S. District Court for the Northern District of Illinois has issued a default judgment against five offshore entities and three individuals for perpetrating a global retail binary options fraud targeting U.S. residents. The defendants operated through websites using names like BigOption, BinaryBook, and BinaryOnline.
The court found the defendants liable for fraud and violations of the Commodity Exchange Act (CEA) and CFTC regulations. They are collectively ordered to pay $112.9 million in restitution and a $338.7 million civil monetary penalty. The order permanently bans them from engaging in further violations of the CEA, registering with the CFTC, and trading on CFTC-regulated markets.
The case originated from a CFTC complaint filed on August 12, 2019, alleging fraudulent practices. The investigation revealed that from March 26, 2014, through August 12, 2019, the defendants misled customers by claiming binary option transactions were profitable, despite the vast majority of customers experiencing losses. Brokers allegedly misrepresented their identities, financial expertise, and locations.
Furthermore, the defendants are accused of misappropriating customer funds and obstructing withdrawal attempts by failing to disclose crucial information regarding bonuses and “risk-free” trades. The court also found that the defendants manipulated their trading platform to limit customer profits.
This judgment follows a previous settlement with Yakov Cohen, who was ordered to disgorge $7 million in ill-gotten gains. In parallel criminal proceedings, Avi Elbaz was convicted of wire fraud and conspiracy in August 2019 and sentenced to 20 years in prison, along with a $28 million restitution order. Cohen also pled guilty to conspiracy to commit wire fraud and received a 5.5-year prison sentence, with a $7 million restitution order issued January 22, 2025.
The CFTC acknowledged the assistance of the U.S. Attorney’s Office for the District of Maryland in the investigation. The case was led by CFTC staff members Heather Dasso, Elizabeth N. Pendleton, Elizabeth Streit, Scott R. Williamson, and Robert T. Howell.
Source: CFTC.gov
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