The Israel Securities Authority (ISA) is currently conducting a criminal investigation into Israeli citizens believed to be promoting the binary options trading platform known as Pocket Option. This platform has been operating in violation of Israeli laws, which have prohibited binary options trading since 2016 due to rampant scams.
Initially, the ISA banned the marketing and distribution of binary options within the country, and in 2017, this ban was expanded to include Israeli marketing efforts targeting international clients. Despite these regulations, the ISA has reported that Pocket Option has continued to reach out to Israeli traders, which constitutes a legal infraction.
The investigation has revealed that Pocket Option, which operates without a license in Israel and is based abroad, offers binary options trading—an inherently risky derivative product that allows traders to bet on the price movement of assets over short time frames. This trading method is fraught with danger, as traders can potentially lose their entire investment if market conditions turn unfavorable.
According to the ISA, individuals under investigation have allegedly recruited clients through social media platforms since 2023, utilizing misleading information and false representations that have resulted in significant financial losses for investors. The scope of the investigation includes serious offenses such as soliciting trades on unlicensed platforms, offering binary options, committing fraud, engaging in money laundering, and providing investment services without the necessary licensing.
Enforcement actions taken by the ISA have included home searches of suspects, the seizure of pertinent evidence, detentions, and the imposition of restrictive measures. The ISA had previously issued warnings to the public regarding Pocket Option and advised investors to steer clear of unlicensed platforms promising high and immediate returns, which are often indicative of fraudulent activity.
Globally, regulatory bodies are also cracking down on binary options and similar products. In the United States, binary options trading is allowed under stringent regulations, with authorities actively pursuing operators who engage in illegal practices. Additionally, event contracts, which allow traders to speculate on various outcomes, have gained traction. The Commodity Futures Trading Commission has focused on political event contracts and is now directing attention toward sports-related contracts, leading to investigations of platforms such as Crypto.com and Kalshi. Notably, Robinhood has recently suspended certain event contracts at the request of regulators.
