Binary Options

 

Binary Options

FRAUD ALERT
All binary options targeting New Brunswickers are illegal. No firms or individuals are registered to sell binary options in the province. In addition, FCNB joined with other participating jurisdictions of the Canadian Securities Administrators in December 2017 to increase investor protection and ban binary options. Many are scams based in foreign countries with little-to-no financial regulation. Once your money leaves Canada, it is virtually impossible to get it back.

These trading platforms are built on the same type of software as online gambling or casino sites. Since the scammers can manipulate the results of the bet behind the scenes any way or any time they want, the house always wins. Even if you appear to make money using a binary option site, actually getting it out is nearly impossible.  Binary options site operators lose if their users win, so it is easy to see why this is the case.

Avoid binary options at all costs. As the saying goes, when you gamble the house always wins, and that is certainly the case in online binary options trading scams.
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What is a binary option?
Binary options are similar to bets. An investor “bets” if the value of an asset like stocks or foreign currency will increase or decrease in a very short period of time (as short as a few minutes). If the investor guesses correctly, they get a predetermined payout. But if the investor is incorrect, they lose everything. It is an all-or-nothing situation, like a game of chance.

How do binary options scams work?
Binary options scams find their victims through ads placed on social media, websites, chat programs, or unsolicited text messages or phone calls.  The sales pitch offers an exciting opportunity to invest money easily and earn returns quickly.  
They will tell you binary options are risk free.  This is a lie.  

A so-called “expert trader” works from a script and uses high-pressure sales tactics to get you to set up an account on their website.  Once an account is set up they entice you with “free money” to start trading.  Then they get you to “invest” your own money using a credit card, pre-paid card, or money transfer.  

Binary options are like gambling.  You make a wager on whether you think the value of an asset will increase or decrease in a fixed (and often very short) period of time – sometimes minutes or even seconds.  When the time period is up, you either receive a payout or lose the wager.  But, the vast majority of the time no trading took place at all.  The “broker” or “expert trader” (a.k.a scam artist) has just pocketed your money from the start.  

Binary options are typically traded within extremely small time frames, which increase risk significantly. Even very knowledgeable investors may find it difficult to predict whether the share price of a public company will go up or down in the next few minutes. Binary options trade with such speed that wins and losses happen very quickly.  You will always “win” at first, to build up your trust and confidence.  But in most cases you are never really investing your money and no trading is taking place.  

Even if you “win” the wager, you are unable to withdraw the money from your account, because the scam artist has already taken it.  You will be given excuses as to why you can’t withdraw your money or close your account.  You will be pressured to invest more. But at the end of the day, it is a scam and the money is gone.  Finally, if they think you are on to the scam, the “trader” will stop all communication with you.  They might even use your credit card or personal information you’ve provided to access any remaining funds they can before they disappear for good.  

Victims of binary options have seen their life savings drained, RSPs lost, and money for post-secondary education gone.  Don’t be fooled – selling binary option to New Brunswickers is not allowed, and it is very likely that you will not be able to get your money back.  The impact of fraud on victims and their families is devastating.  Not only do victims suffer financial losses, but the negative impact to mental, physical and emotional health should not be underestimated.

Is binary options trading legal?
In December 2017, FCNB joined with other participating jurisdictions of the Canadian Securities Administrators to increase investor protection and ban binary options. The ban means: 

  • Binary options shorter than 30 days can’t be sold to individuals in Canada.
  • Binary options shorter than 30 days can’t be sold to companies that were set up just for the purposes of buying, selling or trading binary options

Also, binary options fall within the definition of a “derivative” under the New Brunswick Securities Act and parties selling these to New Brunswick residents must be registered.  However, no firms or individuals are registered to sell binary options in New Brunswick. Although New Brunswickers are being targeted by those purporting to sell a legitimate investment opportunity, it is illegal to sell binary options to New Brunswickers without being registered to do so with FCNB.  Learn more about licence and registration rules in New Brunswick.

What should I do?
  • Avoid binary options at all costs.   Selling unregistered binary options to New Brunswickers is illegal. You will lose your money.  Many of the “trading platforms” operate from servers overseas which means the money goes outside of Canada. This makes it virtually impossible to get your money back.
  • If you suspect you are a victim of a binary options scam, contact your bank and cancel the credit card immediately and report the scam to FCNB .
  • Never give out sensitive personal information online or over the phone to a company or individual you do not know.



Remember – these fake trading platforms are just a dressed up gambling system manipulated by the scammer.  These scammers are not legitimate traders or brokers.  

Legitimate investment opportunities come with documentation about the potential risks and costs, and other important information that investors need in order to make an informed decision.  You are able to see historical trading activity and information about a legitimate investment.  They are regulated and overseen by bodies in place to protect investors and ensure they’re dealt with in a fair manner.  Binary options scams come with none of these protections.

Every investment involves some amount of risk.  Don’t be fooled by these tempting pitches to get rich quick and easily – you will lose in the end.  

 

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Downloadable Resources

Binary Options Infographic


Become a Master of Spotting Fraud (English)


كن خبرياً يف اكتشاف عمليات اإلحتيال

Become a Master of Spotting Fraud (Arabic)

Recognizing and avoiding a fraud or scam protects your own financial future, but it is critical that once you recognize a fraud or scam, you protect those more vulnerable by reporting the fraud attempt.

2017 © Financial and Consumer Services Commission