Securities regulators warning about binary options scam - Action News
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New Brunswick

Securities regulators warning about binary options scam

The Canadian Securities Administrators (CSA) is warning about a scam popping up across Canada that's draining the bank accounts of investors.

Canadian Securities Administrators launched a website last week with information about the scam

A keyboard is shown with the word Scam written where the Return key is.
The overwhelming majority of binary options sites are rigged to lure in victims with small early returns, says the Canadian Securities Administrators. (CBC)

The Canadian Securities Administrators (CSA) is warning about a scam popping up across Canada that'sdraining the bank accounts of investors.

The binary options scam is a short-term bet on the direction of an asset, such as a currency or stock.Unlike regular options, they are all-in: bet right and you make all the money from the person on the other end of the trade.If you're wrong, you lose it all.

"I like to think of it as online gambling disguised as a financial product. It's a wager of sorts,"Jake van derLaan, a member of a CSA task force and the director of enforcement with the Financial and Consumer Services Commission of New Brunswick, told CBC'sShift New Brunswick.

No prize likely

He said an example would be buying a binary option that the Canadian dollar would be worth a certain value at a given time tomorrow, but if you were wrong, you would lose your money.

Even if people are correct, they likely won't get anyprize.

"Many of thesewebsitesare not legitimate. The actual trading doesn't happen," said van der Laan.

The overwhelming majority of binary options sites are rigged to lure in victims with small early returns, says CSA. A "free" $100 in credits will likely be enoughto get a victimhooked.

How people are contacted

Van derLaansaid potential investors are contacted byemail, telephone or social media and directed to awebsitethat looks legitimate with charts and graphs. At thewebsite, people can register, provide credit card information and begin trading.

Scammersuse fake names and are based in other countries, with many coming from Israel, saidVan derLaan.

He said 800 complaints related to the scam were received in Canada last year and heestimated the losses to be in the millions.

Van derLaanadvises that people be skeptical of binary options proposals, research themand to talk to professionals beforehand, such as a financial advisor or regulator for advice.

A binary options awareness page set up by CSA says"no individuals or firms are registered to sell binary options in Canada."

With files from Shift N.B., CBC News