Israel cracks down on fraudulent industry which seeks to scam Americans
NELSON ALMEIDA (AFP/File)
The Israeli cabinet and ministerial committee for legislation approved on Sunday a bill banning binary options trading firms from operating in Israel.
The Israeli government decided to crackdown on binary options trading after a series of investigative reports by the Times of Israel uncovered massive fraud in the shady industry centered in Israel.
A series of reports by the paper exposed fraudulent practices of the nearly billion-dollar industry, which involves sham investment firms duping unwitting victims into making risky short-term investments, sometimes on rigged trading platforms, with the majority of clients losing their money.
Now, a group of American immigrants in Israel are trying to right the wrongs committed by this fraudulent industry. Former swindler turned advocate, Austin Smith, co-founded Wealth Recovery International, a start-up which helps binary options victims recover what they've lost.
Smith applauded the effort by the Israeli government to crack down on the industry but worries that the bill, even if it passes all the bureaucratic hurdles, will not be enough.
"I think it will definitely restore some credibility because binary options exemplifies the worst anti-Semitic stereotypes of controlling the market and taking advantage of people," Smith told i24NEWS, "but I think there is a bunch more that needs to be done."
According to Smith, the fraudulent industry is a national embarrassment to Israel and a black mark on the state's reputation in the global economy.
"It was an extreme embarrassment and I think that it brought a lot of shame to the diaspora community," Smith said. "I speak with a lot of people about this who are involved in finance in New York and their heads spin, especially coming from a country that is completely over-regulated in many areas."
Smith and his colleagues are working to help former binary options employees break the cycle of crime and leave an industry which he calls "addictive."
"The people that trade in binary get addicted to it because it's like gambling," Smith said, explaining that, at the end of the month, he will be attending a job fair where he will help binary options employees transition out of the industry.
According to Smith, firms recruit and target immigrants in Israel as they usually know multiple languages and are particularly vulnerable. Often these companies will promise employees "a dream" and "a way of life." They will also pretend to treat employees like family, offering them a sense of belonging, which can be appealing to outsiders.
For those looking to get out, Smith suggests being honest and upfront about previous employment. Many former fraudsters fear companies won't hire them if they have several years of binary options work on their resume.
"The best thing to do is really be honest with a future employer and to say, I had marketable skills before but this was something I couldn't get out of."
Once the bill passes, the industry may go underground and be harder for law enforcement to track.
"Because there is still a demand for binary, it could go underground in the future," Smith said. "It could make it harder for us to figure out who is running this."
Smith thinks the punishment for those involved should be incredibly harsh. Foreign citizens who are running these companies should have their citizenship revoked, according to Smith, and one way law enforcement can crack down on offenders is by investigating their tax statements and trying to charge them for tax evasion.
Emily Rose is a journalist and webdesk editor at i24NEWS
follow at @emilyarielrose
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