Because binary options scams are quite common in this industry, distrust is paramount when you are approached by a broker or stumble across one on the internet. You should make sure that your broker is authorized to offer its services in your country before you open an account and deposit money, because we are never immune from surprises when a broker is not authorized. The recent fraud example of the Base2Trade broker is striking, hence we should learn some lessons therefrom.
The Base2Trade binary options broker was launched in 2014 and has promoted its trading platform mainly in the UK, whereas the company of the broker is itself registered in Anguilla, British West Indies. To attract customers, the Base2Trade broker proposed a rather extensive list of financial assets, including Forex currency pairs, as well as stocks, stock indices and commodities. The broker was also variable with regards to binary options maturities, which could range from 60 seconds to several weeks (had been up to 1 year). Thus, the broker targeted all types of traders, and it even proposed automatic trading and social trading to attract a maximum number of people to invest in it.
The fact is that the Base2Trade broker was not included in the list of regulated binary options brokers; thus traders were not protected in case of any problem with the broker, and nevertheless many were misled as we will show you in the next paragraph.
In late February 2016, the announcement was made public that the London police arrested the alleged mastermind who was hiding behind the Base2Trade binary options broker. What the authorities accuse the broker and his boss of is: defrauding and stealing from its customers up to £ 2 million (or € 2.6M) in addition to money laundering suspicions. The man whose name was not disclosed was 38 years of age; he was just arrested at the airport in London, when he tried to return home after fleeing from Cyprus where he stayed a few weeks before taking off since a warrant for his name has been issued there. After being arrested, the suspect was immediately taken to the police station for questioning.
A total of two million pounds have been embezzled by the broker wherein the accused has allegedly stolen from more than 150 customers of the Base2Trade. The arrest of the founder of the Base2Trade has occurred after a 13-month investigation by the London police. The latter declared having accumulated evidence against the witness for more than a year. According to the police, this is a classic fraud established in London from a strategic point of view, since the City has a certain brand image, prestige and financial credibility with potential investors.
It is very common for the world of binary options to be linked to justice; in fact, certain binary options brokers face the courts and the criminal judgments of competent authorities. You must not ignore the fact that binary option scams exist; they are a real scourge that account for several million euros of losses each year among traders, hence the financial regulators are trying to prevent binary option scams from progressing.
The Binary option scams are very simple to understand and generally look alike. Certain brokers impersonate authorized brokers; they open what is called a “clone” website and copy the website and services of a regulated broker. They do not hesitate to use its name or a name that strongly resembles it (with a one-letter change) in order to trick the user to deposit his / her money and not let him / her have access to his / her funds. Other brokers that are by no means authorized by the financial authorities will again lie to their traders and display the logos and fictitious license numbers of regulators on their web pages and would argue that they are authorized. They will not hesitate to admit it verbally by soliciting clients over the phone when it is simply a lie.
In order to fight against scams and attempted scams, financial regulators take certain measures; they do not hesitate to impose fines on brokers who break local financial laws (for example the fine imposed against Banc de Binary) when a regulated broker does not comply with the laws. They proceed to license withdrawals (see CedarFinance), and they especially have a preventive role and establish for example a blacklist of binary options brokers particular to their countries. In some cases, the police take control of the investigation and carry out arrests that are usually followed by prison sentences and fines as we have seen today with the example of Base2Trade.