Binary option: Difference between revisions

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{{Short description|Financial exotic option with an all-or-nothing payoff}}

{{Prone to spam|date=January 2014}}

A '''binary option''' is a [[finance|financial]] [[exotic option]]^{[citation needed]} in which the payoff is either some fixed monetary amount or nothing at all.<ref name="Breeden, D. T. 1978">Breeden, D. T., & Litzenberger, R. H. (1978). "Prices of state-contingent claims implicit in option prices". ''Journal of Business'', 621–651.</ref><ref name="Gatheral, J. 2006">Gatheral, J. (2006). ''The volatility surface: a practitioner's guide'' (Vol. 357). John Wiley & Sons.</ref> The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The former pays some fixed amount of cash if the option expires [[in-the-money]] while the latter pays the value of the underlying security. They are also called '''all-or-nothing options''', '''digital options''' (more common in forex/interest rate markets), and '''fixed return options''' ('''FROs''') (on the [[NYSE American]]).<ref name="Ipedia">[http://www.investopedia.com/terms/b/binary-option.asp Binary Option Definition] Investopedia. Retrieved 2013-06-30.</ref>

While binary options may be used in theoretical asset pricing, they are prone to [[fraud]] in their applications and hence banned by regulators in many jurisdictions as a form of [[gambling]].<ref name="Globes 12-15-16" /> Many binary option outlets have been exposed as fraudulent.<ref>{{Cite web |url=https://www.fbi.gov/news/stories/binary-options-fraud |title=Binary Options Fraud |website=Federal Bureau of Investigation |language=en-us |access-date=2017-05-30}}</ref> The U.S. [[Federal Bureau of Investigation|FBI]] is investigating binary option scams throughout the world, and the Israeli police have tied the industry to criminal syndicates.<ref name="FBI">{{cite news |last1=Weinglass |first1=Simona |authorlink=Simona Weinglass|title=FBI says it's investigating binary options fraud worldwide, invites victims to come forward |url=http://www.timesofisrael.com/fbi-says-its-investigating-binary-options-fraud-worldwide-invites-victims-to-come-forward/ |access-date=February 15, 2017 |work =[[The Times of Israel]] |date=February 15, 2017}}</ref><ref name="ToIidesofM"/><ref name=":1" /> The [[European Securities and Markets Authority]] (ESMA) havehas banned retail binary options trading.<ref name="esma.europa.eu">{{Cite web |url=https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors |title=ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors |website=www.esma.europa.eu|access-date=2019-03-21}}</ref> [[Australian Securities & Investments Commission]] (ASIC) considers binary options as a "high-risk" and "unpredictable" investment option, <ref>{{Cite news |url=http://www.ibtimes.com.au/binary-options-trading-australia-how-safe-it-1568192 |title=Binary Options Trading In Australia: How Safe Is It? |date=2018-05-14 |work=International Business Times AU |access-date=2018-05-22 |language=en}}</ref> and finally also banned binary options sale to retail investors in 2021.<ref name="asic.gov.au">{{cite web |url=https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-064mr-asic-bans-the-sale-of-binary-options-to-retail-clients|title=21-064MR ASIC bans the sale of binary options to retail clients |website=[[Australian Securities & Investments Commission]]|access-date=8 March 2022}}</ref>

The FBI estimates that the scammers steal US$10 billion annually worldwide.<ref name="TimesofI3417">{{cite news |last1 =Weinglass |first1=Simona |title=As Israel-based financial fraud soars, police swoop on 20 suspects as part of global, FBI-led sting |url= http://www.timesofisrael.com/as-israel-based-financial-fraud-soars-police-swoop-on-20-suspects-as-part-of-global-fbi-led-sting/ |access-date=March 4, 2017 |work=The Times of Israel |date=March 4, 2017}}</ref> The use of the names of famous and respectable people such as [[Richard Branson]] to encourage people to buy fake "investments" is frequent and increasing.<ref name=branson>{{cite news |url= https://www.theguardian.com/business/2017/may/17/richard-branson-virgin-says-scammers-are-using-his-name-to-dupe-investors |title=Richard Branson says scammers are using his name to dupe investors |work =The Guardian |date=18 May 2017 |author=Press Association |access-date= 18 May 2017}}</ref> Articles published in ''[[The Times of Israel]]'' newspaper explain the fraud in detail, using the experience of former insiders such as a job-seeker recruited by a fake binary options broker, who was told to "leave [his] conscience at the door".<ref name="israeltimes1"/><ref name="israeltimes2"/> Following an investigation by ''The Times of Israel'', [[Cabinet of Israel|Israel's cabinet]] approved a ban on the sale of binary options in June 2017,<ref>{{citation |title=Israel cabinet approves ban on sale of binary options |work =Reuters |author=Tova Cohen |date=June 18, 2017 |url=https://www.reuters.com/article/us-israel-binaryoptions-lawmaking-idUSKBN19906C |access-date=2017-07-15}}</ref> and a law banning the products was approved by the [[Knesset]] in October 2017.<ref name="AtLast">{{cite news |last1=Weinglass |first1=Simona |title=Israel bans binary options industry, finally closing vast, 10-year fraud |url=https://www.timesofisrael.com/israel-bans-entire-binary-options-industry-finally-closing-vast-10-year-fraud/ |access-date=October 24, 2017 |publisher=[[The Times of Israel]] |date=October 23, 2017}}</ref><ref name="Knesset ban 10-24-17">{{Cite news |url=https://www.haaretz.com/israel-news/business/1.818782 |title=Israel Bans Binary Options Industry That Defrauded Millions |last=Tomer |first=Uri |date=2017-10-24 |work=Haaretz |access-date=2017-10-24 |language=en}}</ref>

On January 30, 2018, [[Facebook]] banned advertisements for binary options trading as well as for [[cryptocurrencies]] and [[initial coin offering]]s (ICOs).<ref name="blomm13018">{{cite news |last1=Frier |first1=Sarah |last2=Verhage |first2=Jules |title=Facebook Bans Ads Associated With Cryptocurrencies |url=https://www.bloomberg.com/news/articles/2018-01-30/facebook-bans-ads-associated-with-bitcoin-cryptocurrencies |access-date=February 7, 2018 |work =Bloomberg |date=January 30, 2018}}</ref><ref name="FT013018">{{cite news |last1=Cornish |first1=Chloe |title=Facebook and regulators move to halt cryptocurrency scams |url=https://www.ft.com/content/9c1050ca-05f8-11e8-9650-9c0ad2d7c5b5 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/9c1050ca-05f8-11e8-9650-9c0ad2d7c5b5 |archive-date=2022-12-10 |url-access=subscription |access-date=February 7, 2018 |work =[[Financial Times]]|date=January 30, 2018}}</ref> [[Google]] and [[Twitter]] announced similar bans in the following weeks.<ref name="EU1">{{cite news |title=European Union bans binary options, strictly regulates CFDs |url=https://www.timesofisrael.com/european-union-bans-binary-options-strictly-regulates-cfds/ |last1=Weinglass |first1=Simona |date=March 28, 2018 |access-date=March 21, 2019 |publisher=The Times of Israel}}</ref>

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{{further|Securities fraud}}

Many binary option "brokers" have been exposed as fraudulent operations.<ref name="SEC1"/> In those cases, there is no real [[brokerage]]; the customer is betting against the broker, who is acting as a [[Bucket shop (stock market)|bucket shop]]. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect a payment, the operator will simply stop taking their phone calls.<ref name="israeltimes1">{{cite news | title=The wolves of Tel Aviv: Israel's vast, amoral binary options scam exposed |url= http://www.timesofisrael.com/the-wolves-of-tel-aviv-israels-vast-amoral-binary-options-scam-exposed | date=March 23, 2016 | website=[[The Times of Israel]] | last=Weinglass | first=Simona |access-date=December 8, 2018}}</ref> Though binary options sometimes trade on [[Financial regulation|regulated]] [[Exchange (organized market)|exchange]], they are generally unregulated, trading on the Internet, and prone to fraud.<ref name="Ipedia"/> Most of the binary options brokers are registered in [[Saint Vincent and the Grenadines]] and offering their services globally.{{cn|date=May 2022}} The country's Financial Services Authority has issued a warning to the general public about unlicensed Forex and binary options trading provided by entities registered in Saint Vincent and the Grenadines.<ref>{{Cite web |date=2022-02-03 |title=UNLICENSED FOREX/BINARY OPTIONS – Financial Services Authority |url=https://svgfsa.com/unlicensed-forex-binary-options/ |url-status=live |access-date=2022-05-12 |website=svgfsa.com}}</ref>

=== European Union ===

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=== France ===

In August 2016, France's [[Law on transparency, the fight against corruption and the modernization of economic life|''Sapin II'' bill on transparency]] was announced by the [[Autorité des marchés financiers (France)|Autorité des Marchés Financiers]] (AMF), seeking to outlaw all financial derivatives advertising. The AMF stated that it would ban the advertising of certain highly speculative and risky financial contracts to private individuals by electronic means.<ref>{{citation|type=press release|title=Ban on the advertising of forex products, binary options and some CFDs: AMF launches consultation on changes to its General Regulation|date=August 1, 2016|work=Autorité des Marchés Financiers|url=http://www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2016.html?docId=workspace%3A%2F%2FSpacesStore%2Fad42eecc-9720-49da-82a8-2ddcb72fbf1d|access-date=January 15, 2017|archive-url=https://web.archive.org/web/20190617015956/https://www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2016.html?docId=workspace%3A%2F%2FSpacesStore%2Fad42eecc-9720-49da-82a8-2ddcb72fbf1d|archive-date=June 17, 2019|url-status=dead}}</ref><ref>{{cite news |url=http://financefeeds.com/ig-group-officially-responds-french-fx-cfd-advertising-ban/ |title=IG Group officially responds to French FX and CFD advertising ban |work=Finance Feeds |date=9 January 2017 |author=Andrew Saks-McLeod |access-date=18 May 2017 |archive-date=3 September 2017 |archive-url=https://web.archive.org/web/20170903034136/https://financefeeds.com/ig-group-officially-responds-french-fx-cfd-advertising-ban/ |url-status=dead }}</ref> The document applies specifically to binary options, and to [[contracts for difference]] (CFDs), and financial contracts on currencies. The French regulator is determined to cooperate with the legal authorities to have illegal websites blocked.<ref>{{cite news|url=http://financefeeds.com/breaking-amf-toughens-stance-advertising-following-public-consultation/|title=AMF toughens its stance on advertising following public consultation|work=Finance Feeds|date=10 January 2017|author=Maria Nikolova|access-date=18 May 2017|archive-date=7 May 2017|archive-url=https://web.archive.org/web/20170507140401/http://financefeeds.com/breaking-amf-toughens-stance-advertising-following-public-consultation/|url-status=dead}}</ref> The law also prohibits all forms of sponsorship and partnership that results in direct or indirect advertising of the financial products it covers. This ban was seen by industry watchers as having an impact on sponsored sports such as European football clubs.<ref>{{citation|title=French football clubs rush to terminate binary options partnerships|quote=Under Article 77 of the Sapin II law, football teams have until the end of June this year to terminate all sponsorships|author=Maria Nikolova|work=Finance Feeds|url=http://financefeeds.com/french-football-clubs-rush-terminate-binary-options-partnerships/|access-date=2017-01-15|archive-date=2019-06-17|archive-url=https://web.archive.org/web/20190617015948/https://financefeeds.com/french-football-clubs-rush-terminate-binary-options-partnerships/|url-status=dead}}</ref>

The Cyprus-based company 24Option<ref>{{Cite web|url=https://cyprusregistry.com/companies/EE/41700|title=24OPTION - Cyprus Business Name - CyprusRegistry.com|website=cyprusregistry.com|access-date=2019-04-17}}</ref> was banned from trading in France by AMF earlier in 2016.<ref>{{citation|type=press release|title=L'Autorité des marchés financiers interdit à Rodeler Limited (" 24option ") de fournir des services sur le territoire français|trans-title=Autorité des Marchés Financiers halts Rodeler Limited ("24option") activities in France|date=July 29, 2016|publisher=Autorité des Marchés Financiers|url=http://www.amf-france.org/Actualites/Communiques-de-presse/AMF/annee-2016.html?docId=workspace%3A%2F%2FSpacesStore%2Ff35a247e-e20d-42c3-8b3d-b354794a2a70|access-date=January 15, 2017|archive-url=https://web.archive.org/web/20190617015955/https://www.amf-france.org/Actualites/Communiques-de-presse/AMF/annee-2016.html?docId=workspace%3A%2F%2FSpacesStore%2Ff35a247e-e20d-42c3-8b3d-b354794a2a70|archive-date=June 17, 2019|url-status=dead}}</ref> They had sponsored a well-known Irish [[mixed martial arts|mixed martial artist]], [[Conor McGregor]], who in turn promoted the company through social media.<ref>{{citation|title=Conor McGregor sponsor barred from operating in France|work=Irish Times|date=November 19, 2016|author=Barry O'Halloran|url=http://www.irishtimes.com/business/media-and-marketing/conor-mcgregor-sponsor-barred-from-operating-in-france-1.2874175}}</ref>

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=== Indonesia ===

According to the Commodity Futures Trading Regulatory Agency (CoFTRA) in Indonesia, also known as BAPPEBTI, binary options are considered a form of online gambling and is illegal in the country. The move to delegalize binary options stems from concerns that the public may be swayed by misleading advertisements, promotions, and offers to participate in fraudulent practices that operate under the guise of binary options trading.<ref>{{Cite web|last=Dirgantara|first=Hikma|date=2022-02-03|title=Bappebti Blokir 92 Entitas Binary Option di 2021, Termasuk Binomo, IQ Option|url=https://investasi.kontan.co.id/news/bappebti-blokir-92-entitas-binary-option-di-2021-termasuk-binomo-iq-option|access-date=2022-02-07|website=Kontan.co.id|language=id}}</ref> As of 2 February 2022, at least 92 binary options websites, including Binomo, [[IQ Option]], and Olymp Trade, have been classified as unlicensed operators and blocked by the Indonesian government.<ref>{{Cite web|date=2022-02-04|title=Indonesian regulators block illegal trading websites following complaints on social media|url=https://kr-asia.com/indonesian-regulators-block-illegal-trading-websites-following-complaints-on-social-media|access-date=2022-02-07|website=KrASIA|language=en}}</ref>

=== Israel ===

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;Fraud

In 2016 ''[[The Times of Israel]]'' ran several articles on binary options fraud. "The wolves of Tel Aviv: Israel's vast, amoral binary options scam exposed" revealed that the industry is a scam.<ref name="israeltimes1" /> A second article describes in detail how a binary options salesman fleeced clients. "According to one ex-employee of a firm that employs over 1,000 people in a high-rise office building in [[Tel Aviv]], losses are guaranteed because the 'dealing room' at the binary options firm controls the trading platform — likeplatform—like the crooked ownership of a rigged [[casino]] manipulating the [[roulette wheel]]".<ref name="israeltimes2">{{cite news | url =http://www.timesofisrael.com/ex-binary-options-salesman-heres-how-we-fleece-the-clients/ |title = Ex-binary options salesman: Here's how we fleece the clients | work =The Times of Israel |author1=Weinglass, Simona |author2=Horovitz, David |name-list-style=amp| date=April 7, 2016 }}</ref>

In July 2016 the Israeli binary option firms Vault Options and Global Trader 365 were ordered by the [[United States District Court for the Northern District of Illinois|U.S. District Court for the Northern District of Illinois]] to pay more than $4.5 million for unlawful off-exchange binary options trading, fraud, and registration violations. The companies were also banned permanently from operating in the United States or selling to U.S. residents.<ref>{{cite news|url=http://www.cftc.gov/PressRoom/PressReleases/pr7414-16|title= Federal Court Orders Israeli Web-based Firms, Vault Options, Ltd. and Global Trader 365, to Pay More than $4.5 Million for Unlawful Off-Exchange Binary Options Trading, Fraud, and Registration Violations|date=July 28, 2016|publisher=Commodities and Futures Trading Commission}}</ref>

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In September 2017, the FBI arrested Lee Elbaz, CEO of binary options trading company Yukom Communications, upon her arrival in the United States. They arrested her for [[wire fraud]] and conspiracy to commit wire fraud.<ref name="Matts092417">{{cite news |last1=Staff|first1=Tori|title=FBI arrests Israeli binary options CEO as she disembarks El Al flight at JFK|url=https://www.timesofisrael.com/fbi-arrests-israeli-binary-options-ceo-as-she-disembarks-el-al-flight-at-jfk/|work =The Times of Israel|date=September 24, 2017|access-date=September 24, 2017}}</ref> In 2019, Lee Elbaz was found guilty and sentenced to 22 years in prison.<ref>{{cite news |title=Former CEO of Israeli Company Sentenced to 22 Years in Prison for Orchestrating Major International Binary Options Fraud Scheme|url=https://www.justice.gov/opa/pr/former-ceo-israeli-company-sentenced-22-years-prison-orchestrating-major-international-binary/|work =Department of Justice|date=December 19, 2019|access-date=August 19, 2022}}</ref>

In February 2019, the FBI arrested Austin Smith, Founderfounder of Wealth Recovery International, after his arrival in the United States. Smith was arrested for [[wire fraud]] due to his involvement as an employee of Binarybook.com.<ref>{{Cite web|url=https://www.timesofisrael.com/israeli-american-claiming-to-help-binary-options-victims-pleads-guilty-to-fraud/|title=Israeli-American claiming to help binary options victims pleads guilty to fraud|first=Simona|last=Weinglass|website=www.timesofisrael.com}}</ref>

===Malta===

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===United Kingdom===

;Binary options trading

In the UK, binary options were regulated by the [[Gambling Commission]] rather than the [[Financial Conduct Authority]] (FCA).<ref name=ftfca>{{cite web | url=https://www.ft.com/content/d493d457-9d93-3b9f-9d05-a09774f4b95a |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/d493d457-9d93-3b9f-9d05-a09774f4b95a |archive-date=2022-12-10 |url-access=subscription | title=FCA warns on illegal binary options providers | date=January 12, 2018 | last=Murphy | first=Hannah | newspaper=[[Financial Times]] | access-date=December 8, 2018}}{{subscription required}}</ref> This regulation, however, applied only to firms that have gambling equipment in the UK.<ref name=ftadvisor2017>{{cite web|url=https://www.ftadviser.com/investments/2017/11/15/fca-warns-investors-against-binary-options/ | title=FCA warns investors against binary options | date=November 15, 2017 | last=Fantato|first=Damian|website=FTAdviser|access-date=December 8, 2018}}</ref> The FCA in 2016 did propose bringing binary options under its jurisdiction and restricting them. They stated that binary options "did not appear to meet a genuine investment need".<ref name="FT10192017">{{cite news|last1=Murphy|first1=Hannah|title=Police launch raids on 20 City of London businesses|url=https://www.ft.com/content/f5cf9ff2-b4d2-11e7-a398-73d59db9e399 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/f5cf9ff2-b4d2-11e7-a398-73d59db9e399 |archive-date=2022-12-10 |url-access=subscription |url-status=live|access-date=October 21, 2017|newspaper =[[Financial Times]]|date=October 19, 2017}}{{subscription required}}</ref> In March 2017, [[National Fraud Intelligence Bureau|Action Fraud]] issued a warning on binary options.<ref>{{cite web|url=https://www.actionfraud.police.uk/news/what-is-binary-options-fraud-and-what-are-the-law-enforcement-doing-about-it | title=What is Binary Options Fraud and what are the law enforcement doing about it? | date=March 31, 2017 | publisher=[[National Fraud Intelligence Bureau|Action Fraud]] | access-date=December 8, 2018}}</ref>

The [[Isle of Man]], a self-governing Crown dependency for which the UK is responsible, has issued licenses to companies offering binary options as "games of skill" licensed and regulated under fixed odds betting by the [[Isle of Man Gambling Supervision Commission]] (GSC).<ref>{{cite web | url =https://www.gov.im/categories/business-and-industries/gambling-and-e-gaming/licence-holders/ | title =Licence holders | website =gov.im | publisher =Isle of Man Government | access-date =2017-09-02}}</ref> This positions binary options as a form of gambling, and the administrator of the trading as something akin to a casino, as opposed to an [[Exchange (organized market)|exchange]] or [[brokerage house]].

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In the United States, the [[Securities and Exchange Commission]] (SEC) approved [[Exchange-traded product|exchange-traded]] binary options in 2008.<ref>{{Cite news|url=https://www.reuters.com/article/companyNewsAndPR/idUSN0943920080609|title=CBOE to list binary options on S&P 500, VIX |last=Frankel |first = Doris |date=June 9, 2008 | publisher=[[Reuters]] | access-date=December 8, 2018}}</ref> Trading commenced on the [[NYSE American]] (MYSEA) and the [[Chicago Board Options Exchange]] (CBOE) in May and June 2008.<ref name=leapinfo>{{cite web | url=https://www.leaprate.com/news/the-history-of-binary-options-trading-infographic/ | title=The History of Binary Options Trading – Infographic | date=January 5, 2017 | website=leaprate.com | access-date=December 8, 2018}}</ref>

The MYSEA offers binary options on some [[exchange-traded fund]]s and a few highly liquid equities such as [[Citigroup]] and [[Google]]. On the exchange binary options were called "fixed return options" (FROs). To reduce the threat of [[market manipulation]] of single stocks, FROs use a "settlement index" defined as a volume-weighted average of trades on the expiration day. MYSEA and [[Donato A. Montanaro]] submitted a [[patent application]] for exchange-listed binary options using a volume-weighted settlement index in 2005.<ref>[httphttps://wwwpatentscope.wipo.int/pctdbsearch/en/wodetail.jspjsf?wodocId=2005069978WO2005069978 "System and methods for trading binary options on an exchange" Pantent WO2005069978]. {{Webarchive|url=https://webPatentscope.archive.org/web/20090218165844/http://www.wipo.int/pctdb/en/wo.jsp?wo=2005069978 |date=2009-02-18 }}, World Intellectual Property Organization filing. Retrieved on 20132025-0105-1221.</ref>{{non-primary source needed|date=May 2025}} CBOE offers binary options on the [[S&P 500]] (SPX) and the [[VIX|CBOE Volatility Index (VIX)]].<ref name="cboebin">{{cite web| url=http://www.cboe.com/micro/binaries/BinariesQRG.pdf | title=CBOE Introduces Binary Options on SPX SM and VIX | date=September 10, 2008 | publisher=[[Chicago Board Options Exchange]] | archive-url=https://web.archive.org/web/20080910044859/http://www.cboe.com/micro/binaries/BinariesQRG.pdf | archive-date=September 10, 2008 | access-date=December 8, 2018}}</ref> The tickers for these are BSZ<ref>{{cite web|url=http://www.cboe.com/delayedquote/detailed-quotes?ticker=BSZ | title=^BSZ (CBOE Binary Options On The S&P 500 Index) | date=December 8, 2018 | publisher=[[Chicago Board Options Exchange]] | access-date=December 8, 2018}}</ref> and BVZ, respectively.<ref>{{cite web | url=http://www.cboe.com/delayedquote/detailed-quotes?ticker=BVZ | title=^BVZ (CBOE Binary Options Volatility) | date=December 8, 2018 | publisher=[[Chicago Board Options Exchange]] | access-date=December 8, 2018}}</ref>

[[Nadex|NADEX]], a U.S.-based [[Commodity Futures Trading Commission]] (CFTC) regulated exchange, launched binary options for a range of [[Forex]], [[Commodity#Commodity trade|commodities]], and [[stock indices]]' markets in June 2009,.<ref>{{cite web|url=http://www.nadex.com/content/files/pressrelease-01.pdf|title=Nadex, North American derivatives exchange rolls out new trading platform, products|date=June 22, 2009|publisher=[[Nadex]]|archive-url=https://web.archive.org/web/20120401080606/http://www.nadex.com/content/files/pressrelease-01.pdf|archive-date=April 1, 2012|access-date=December 8, 2018}}</ref> On March 30, 2010 the CFTC issued an amended Order of Designation to allow trades on NADEX to be intermediated.<ref>{{Cite web|url=https://sirt.cftc.gov/SIRT/SIRT.aspx?Topic=TradingOrganizationsAD&Key=34536|title=- CFTC|website=sirt.cftc.gov|access-date=2019-03-21}}</ref> NADEX have since offered binary options trading between buyers and sellers. They do not participate in the trades.<ref>{{Cite web|url=https://www.nadex.com/why-nadex/regulated-and-legal-for-us-residents|title=Regulated & Legal for US Residents|date=2015-09-24|website=Nadex|language=en|access-date=2019-03-21}}</ref>

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On June 6, 2013, the U.S. CFTC and the SEC jointly issued an Investor Alert to warn about fraudulent promotional schemes involving binary options and binary options trading platforms. The two agencies said that they had received numerous complaints of fraud about binary options trading sites, "including refusal to credit customer accounts or reimburse funds to customers; [[identity theft]]; and manipulation of software to generate losing trades". Other binary options operations were violating requirements to register with regulators.<ref name="CFTC investor warning" /><ref name="SEC1">{{cite web| url=https://www.sec.gov/investor/alerts/ia_binary.pdf | title = Investor Alert Binary Options and Fraud | publisher=[[U.S. Securities and Exchange Commission]] | access-date = December 8, 2018}}</ref>

In June 2013, U.S. regulators charged Israeli-Cypriot company [[Banc De Binary]] with illegally selling binary options to U.S. investors.<ref name="CFTC investor warning" /><ref name=":0">{{cite web|url=https://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171575220#.U4Au_ygVcWQ|title=SEC Warns Investors About Binary Options and Charges Cyprus-Based Company with Selling Them Illegally in U.S.|publisher=[[U.S. Securities and Exchange Commission]] | access-date=December 8, 2018}}</ref> In February 2016, the company reached an $11 million settlement with U.S. authorities. Regulators found the company used a "virtual office" in New York's [[Trump Tower]] in pursuit of its scheme, evading a ban on off-exchange binary option contracts. The company neither admitted nor denied the allegations.<ref>{{cite news| url=https://www.wsj.com/articles/banc-de-binary-reaches-11-million-settlement-with-u-s-authorities-1456409180 |title = Banc de Binary Reaches $11 Million Settlement with U.S. Authorities |newspaper = [[The Wall Street Journal]] | date=February 25, 2016 | last=Patrick | first=Margot |access-date=December 8, 2018}}{{subscription required}}</ref> In November 2016, SEC published yet another Investor Alert on binary options websites.<ref>{{cite web|url=https://www.sec.gov/oiea/investor-alerts-bulletins/ia_binaryoptions.html | title=Investor Alert: Binary Options Websites May Be Used for Fraudulent Schemes | date=November 10, 2016 | publisher=[[U.S. Securities and Exchange Commission]] | access-date=December 8, 2018}}</ref> In 2016,

In February 2017 ''[[The Times of Israel]]'' reported that the FBI was conducting an active international investigation of binary option fraud, emphasizing its international nature, saying that the agency was "not limited to the USA". Victims from around the world were asked to contact an FBI field office or the FBI's [[Internet Crime Complaint Center]]. The investigation is not limited to the binary options brokers, but is comprehensive and could include companies that provide services that allow the industry to operate. [[Credit card]] issuers will be informed of the fraudulent nature of much of the industry, which could possibly allow victims to receive a [[chargeback]], or refund, of fraudulently obtained money.<ref name="FBI"/>

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== External links ==

*[httphttps://www.BinaryOptionsFraudbinaryoptionsfraud.ca/ Canadian securities regulators website]

*[https://www.cftc.gov/ConsumerProtection/FraudAwarenessPrevention/CFTCFraudAdvisories/fraudadv_binaryoptions.html CFTC investor alert]

*{{cite news|last1=Levy-Weinrib|first1=Ela|title=Regulator seeks blanket binary options ban|url=http://www.globes.co.il/en/article-regulator-seeks-blanket-binary-options-prohibition-1001175186|access-date=May 6, 2018|publisher=[[Globes (newspaper)|Globes]] English|date=February 2, 2017}}