Two Israeli firms, Vault Options, Ltd. and Global Trader 365, have been ordered to pay $3 million in penalties and $1,587,731 in restitution following a CFTC enforcement action. Judge John Z. Lee of the U.S. District Court for the Northern District of Illinois issued the default judgment on July 20, 2016, stemming from a complaint filed in February of the same year.
The CFTC alleged that Vault and GT 365 illegally offered and entered into binary commodity option contracts with U.S. retail customers without being registered as a designated contract market or exempt board of trade. These transactions were deemed unlawful off-exchange options and swaps. The firms are accused of soliciting and receiving at least $1.6 million from customers across 22 states for these illicit contracts.
According to the court order, the companies defrauded customers by making false promises of high profits while knowing many would quickly lose their investments. They also allegedly falsely claimed customer funds were insured, ignored inquiries about fund status, and ultimately misappropriated the money. The CFTC further found that the firms operated as unregistered Futures Commission Merchants.
The judgment includes permanent injunctions and trading bans against both entities. However, the CFTC cautioned victims that recovering lost funds is not guaranteed, as the defendants may lack sufficient assets. The agency emphasized its commitment to protecting customers and holding wrongdoers accountable.
The CFTC acknowledged the assistance of international regulators, including the Israeli Securities Authority, the Cyprus Securities and Exchange Commission, and the Ontario Securities Commission, in the investigation. Camille Arnold, Heather Dasso, and other members of the CFTC’s Enforcement Division were responsible for the case.
The CFTC continues to advise potential investors about the risks of fraudulent binary options schemes and maintains a “RED” list of suspected fraudulent firms.
Source: CFTC.gov
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