The Severe Fines and Penalties for Binary Options Fraud

If you or someone you know has been accused of binary options fraud, you may be facing significant fines and penalties. At Spodek Law Group, our experienced federal criminal defense attorneys can help protect your rights and fight for the best possible outcome in your case. Call us today at 212-300-5196 for a free and confidential consultation.

What is Binary Options Fraud?

Binary options fraud involves the manipulation and deception surrounding binary options trading platforms and brokers. Binary options are a type of all-or-nothing investment contract where investors bet on whether an underlying asset, like a stock or commodity, will go up or down in value over a set period of time, usually just minutes or hours.While binary options are legal, many online platforms and brokers engaging in binary options are operating illegally. Common binary options scams include:

• Refusing to credit customer accounts or reimburse funds
• Identity theft and collecting customer information for illegal uses
• Manipulating trading software to distort prices and payouts
• Overstating investment returns and understating risks
• Operating without proper licensing and registration

The SEC, CFTC, and FBI have all issued warnings about the prevalence of binary options fraud. Regulators estimate that fraudulent marketing schemes involving binary options result in losses of $10 billion annually worldwide.

Criminal Penalties for Binary Options Fraud

Binary options fraud may be prosecuted under several different federal criminal statutes with severe potential penalties, including:

Wire Fraud (18 U.S.C. § 1343)

Wire fraud is a very common charge in binary options cases. It involves any scheme to defraud or obtain money by false pretenses that uses interstate wire communications, like the internet or phone calls.Penalties: Up to 20 years in federal prison, or up to 30 years if the fraud targeted financial institutions or involved disaster relief or emergency benefits. Fines can be up to $250,000 for individuals or $500,000 for organizations.

Commodities Fraud (18 U.S.C. § 1348)

This statute specifically prohibits defrauding anyone in connection with a commodity for future delivery, or obtaining money by false pretenses in connection with the purchase or sale of a commodity. Many binary options are considered commodities.Penalties: Up to 25 years in prison and fines up to $250,000 for individuals or $500,000 for organizations. If the violation involves manipulation or attempted manipulation of commodity prices, the maximum prison sentence increases to 30 years.

Securities Fraud (15 U.S.C. § 78j)

Also known as 10b-5 fraud, this makes it illegal to use manipulative or deceptive devices in connection with the purchase or sale of any security. Some binary options may be considered securities under the Securities Exchange Act.Penalties: Up to 20 years in prison and fines up to $5 million for individuals or $25 million for entities. Defendants may also have to pay restitution to victims.

Other Related Charges

Binary options fraud schemes may also involve other white-collar charges, such as:

• Conspiracy (18 U.S.C. § 371)
• Mail fraud (18 U.S.C. § 1341)
• Wire fraud involving financial institutions (18 U.S.C. § 1343)
• Money laundering (18 U.S.C. § 1956)
• Aggravated identity theft (18 U.S.C. § 1028A)
• Unlawful internet gambling (31 U.S.C. § 5363)

These additional charges can each add years or even decades to a potential prison sentence.

Civil and Administrative Penalties

In addition to criminal prosecution, binary options fraudsters may face steep civil and administrative penalties from regulatory agencies like the SEC and CFTC.

SEC Civil Enforcement Actions

The SEC can file a civil lawsuit in federal court against individuals and companies accused of binary options fraud involving securities. Potential remedies and penalties include:

• Disgorgement of ill-gotten gains
• Civil monetary penalties up to the greater of $181,071 per violation or the gross pecuniary gain to the defendant
• Officer and director bars
• Penny stock bars
• Injunctions against future violations

See, e.g., SEC v. Banc de Binary Ltd., No. 2:13-cv-00993-RCJ-VCF (D. Nev. 2016) (ordering over $9 million in disgorgement and penalties against binary options company for selling illegal off-exchange options).

CFTC Administrative Actions

The CFTC can bring administrative proceedings against binary options companies and individuals for fraud or other violations of the Commodity Exchange Act and CFTC regulations. Potential penalties include:

• Cease and desist orders
• Trading and registration bans or suspensions
• Restitution to customers
• Disgorgement of ill-gotten gains
• Civil monetary penalties up to the greater of $140,000 per violation or triple the monetary gain to the accused

See, e.g., In re Vision Financial Partners, LLC, CFTC Docket No. 16-02 (Nov. 2015) (imposing over $3 million in restitution and penalties for binary options fraud).

Recent Binary Options Fraud Cases

To understand the severity of penalties in binary options fraud cases, consider these recent examples: As these cases demonstrate, binary options fraud is aggressively prosecuted and the consequences of a conviction can be severe.

Defenses to Binary Options Fraud Charges

Despite the seriousness of binary options fraud allegations, several defenses may be available depending on the circumstances:

• Lack of intent to defraud: Fraud charges require proof of willful or knowing intent to defraud. If you did not intend to deceive or cheat anyone, that can be a strong defense.
• Puffery: General exaggerations or hyperbole in marketing, as opposed to material misrepresentations, typically are not actionable as fraud. Saying something is the "best" product is likely puffery, while claiming specific investment returns is a factual representation.
• No material misrepresentations: Fraud requires a false statement of material fact. If your statements were truthful or mere opinions rather than facts, that can negate an element of the offense.
• Entrapment: If law enforcement induced you to commit a crime that you were not predisposed to commit through harassment, threats, or pressure tactics, entrapment may apply. However, simply providing you an opportunity to commit the offense is not entrapment.
• Statute of limitations: The statute of limitations for most federal fraud crimes is five years. If the government does not bring charges within that time period, you may be able to get the case dismissed.

Of course, every case is unique and you should consult with an experienced federal defense attorney to determine what defenses might apply to your specific situation.

Choosing the Right Binary Options Fraud Defense Attorney

Choosing the right defense attorney can make all the difference in a binary options fraud case. You need a lawyer with extensive experience in complex federal fraud cases who will fight tirelessly to protect your rights and freedom.At Spodek Law Group, our battle-tested federal criminal defense attorneys have successfully represented many clients accused of binary options fraud and related offenses. Led by founding partner Todd Spodek, a widely recognized authority on federal criminal defense, our firm has the skills, resources, and relentless dedication you want on your side when your future is at stake.Some key considerations in selecting a binary options fraud defense lawyer include:

• Experience: How many binary options fraud cases have they handled? Do they have experience with the specific charges you are facing?
• Results: What is their track record of success in federal fraud cases? Have they taken cases to trial and won acquittals?
• Reputation: Are they respected by judges, prosecutors, and other lawyers? Will the government take them seriously as a formidable opponent?
• Personal attention: Will you be just another case file or will your case get the individualized attention it deserves? Make sure your attorney is responsive and accessible when you need them.
• Fees: How do they charge for their services? Do they offer flexible payment plans? You want an attorney who is transparent and upfront about their fees.

At Spodek Law Group, we pride ourselves on providing aggressive, effective, and personalized representation for each and every client. We understand what you are going through and will do everything in our power to achieve the best possible outcome.

Conclusion

If you or a loved one has been charged with binary options fraud, it is essential that you act quickly to protect your rights and build the strongest possible defense. The stakes in these cases are high, with lengthy prison sentences and massive fines on the table.At Spodek Law Group, we have the knowledge, experience, and unwavering commitment to help you navigate these treacherous legal waters. Our federal criminal defense attorneys will leave no stone unturned in fighting for your freedom and future.Don't face binary options fraud charges alone. Contact the Spodek Law Group today at 212-300-5196 or visit us online at https://www.federallawyers.com to schedule a free and confidential consultation. Let us put our proven track record of success to work for you.