Binary Options Boss Arrested
by Glenn Baird - May 20, 2017
Eliran Saada, the owner of Express Target Marketing, was arrested earlier this week and charged with suspicion of aggravated fraud, misrepresentation, false accounting, forgery, extortion and blackmail. Saada runs a multi-billion-dollar binary options company from his base in Tel Aviv. Calls for his arrest and other leading players involved in Israel’s highly controversial binary options industry have been lodged for well over a year now, with a leading Israeli Newspaper, The Times of Israel, singling out the practice they have labelled as “a vast, dishonourable industry.”
In an article published last March, The Times of Israel coined the term “The Wolves of Tel Aviv” to help paint the picture of an “amoral” business responsible for preying on countless numbers of innocent consumers. The news outlet was so incensed by the findings of its investigations that in the thirteen months following on from their initial article they have campaigned tirelessly to see those responsible brought to justice in an attempt to salvage Israel’s damaged reputation.
The first thing to make clear is that binary options themselves are not illegal. However, you will struggle to find any financial expert who would recommend dabbling in this “all or nothing” approach to the playing the stock markets. Those with a vested interest in the industry or those who have been blinded by spurious rhetoric might try to argue that binary options are an investment. They might claim binary options cannot be classified as gambling because trading stocks is a science and if you get the right advice then you can accurately predict changes that will occur in the markets. Yet, take that vested interest and place it to one side and the consensus is that binary options should be avoided at all costs.
Binary options are named after the nature in which you win or lose when using them. Like a one or a zero in binary sequencing there is no middle ground. You decide whether you think a market will rise or fall within a set time frame, anything between 1 minute and 1 hour. If your estimate is correct you can win up to 80% percent of your bet and if you lose, you lose the lot. Binary options companies will tell you that you can make an 80% return on your investment but what they fail to tell you is that the house has a 20% percent edge and that it is bordering on impossible to know what the market is going to do within the next hour, never mind the next minute.
What we’re talking about is a “get rich quick” scheme that has all the odds stacked in the dealer’s favour. There is nothing consistent or sustainable about binary options and whilst you might fluke a lucky break, over time the maths will catch up with you and leave you penniless. All experts worth listening to will tell you to steer well clear of binary options and yet here we are describing an industry that is estimated to be worth somewhere between one and ten billion dollars a year in Israel alone. So somewhere down the line, the somewhat obvious message that consumers are playing against a significant house edge is being lost.
Step in “The Wolves of Tel Aviv” and a predatory marketing campaign that instructed sales staff to “leave their conscience at the door.”
The Times of Israel has made it clear that there are no innocent parties involved in the sale of binary options in Israel, other than those who have fallen victim to their ruthless marketing campaign.
A recruitment advertisement for one company comprises a picture of a vampire, dollar signs embossed in her eyes, blood running down the side of her pale-skinned mouth, with the slogan “Predators Work at Night” filling up the rest of the picture. To suggest that employees of this particular company didn’t know what they were getting into would be to give them far too much credit.
In an exclusive interview with The Times of Israel a former employee of a binary options company revealed that he knew he was ripping off customers. Sales staff were hired from other firms renowned for aggressive marketing and were told to adopt fake names, a false location, to embellish their expertise in stock market trading by inventing qualifications and to use rhetoric specifically designed to confuse and to con customers into spending, and inevitably losing their money.
Whether wracked with self-loathing or cartwheeling across the office at the thought of making another dishonest sale, the truth is that no one can plead innocence or ignorance to their part in the sale of binary options.
However, the most sizeable portion of blame must be placed at the feet of those at the top of the tree. Corruption in many of Israel’s binary option companies runs much deeper than just underhand sales tactics and having odds rigged so firmly in your favour that you cannot lose. To not pay out when the odds are defied or to prevent customers from cashing out long enough to have them lose their winnings is quite simply theft. To block the numbers from callers that cannot access their accounts is utterly immoral.
What makes all this so sickening it that binary options give the house such a ridiculously unfair advantage that to then blatantly steal from the few customers who break with probability and make some money suggests that those involved are clearly looking to make a killing quickly and then get out. There is no long-term attempt to develop customer relationships or to build a reputable brand. Like those playing binary options, those running them want to make a lot of money in as short a time frame as they possibly can.
If all this wasn’t bad enough there have even been reports that certain binary options companies have pulled markets from their sites when they become too predictable. As I’ve written already most experts would argue that there is nothing predictable about stock markets over such short time scales, but when there are rare exceptions to this rule those markets quickly disappear, preventing anyone from cashing in on them.
What is most surprising about Eliran Saada’s arrest is that it has taken so long to happen. Israeli authorities have known for some time that binary options companies have been operating illegally. Last year it was made illegal for binary options companies to trade within Israel. It was not, however, made illegal for them to base themselves in Israel whilst trading in foreign countries.
Authorities must have known at this point that the money being brought in by Eliran Saada and his counterparts was the result of amoral practice. When forcing the ban preventing binary options trading in Israel the authorities stated that they “have no control over what occurs in other countries,” and they hoped that “in other countries, they will follow in our footsteps and make binary trading illegal.”
Yet, as we saw earlier this week they did have the power to make arrests and begin putting an end to the corruption. So why the wait?
All we can now hope for is that the arrests keep coming and that the trade in binary options either comes to an end or a regulator steps in to place much tighter controls over the industry. If this does happen it is very like that all trade in binary options will eventually disappear as consumers learn how hopeless this particular get rich scheme is.
Eliran Saada’s arrest should be the beginning of the end of binary options corruption in Israel. What it cannot be is a token gesture. It cannot be the acknowledgement of a corrupt industry that is allowed to continue operating as if nothing has changed. This has to be end of “what may well be the single greatest corruption scandal in the history of modern Israel.”