CFTC Secures $7 Million Disgorgement Order in Multi-Million Dollar Binary Options Scheme

The U.S. Commodity Futures Trading Commission (CFTC) has announced that the U.S. District Court for the Northern District of Illinois entered a consent order requiring Yakov Cohen to disgorge $7 million in ill-gotten gains derived from a massive binary options fraud scheme. The order resolves CFTC charges against Cohen stemming from an August 2019 enforcement action. The lawsuit also named co-defendants Yossi Herzog, Lee Elbaz, Shalom Peretz, Yukom Communications Ltd., Linkopia Mauritius Ltd., Wirestech Limited (doing business as BigOption), WSB Investments Ltd. (doing business as BinaryBook), and Zolarex Ltd. (doing business as BinaryOnline). The civil action remains pending against the co-defendants. According to the court findings, from approximately March 2014 through September 2017, Cohen and his co-defendants solicited investors in the United States and globally to trade binary options through deceptive platforms including BigOption, BinaryBook, and BinaryOnline. The defendants falsely represented that their financial interests aligned with those of their customers, when in reality the scheme profited directly from client losses. The platforms also misled customers regarding the mechanics of their trades. The binary options offered were not genuine market transactions subject to objective conditions, but rather internal book entries manipulated by the operators. Scheme operators also misrepresented their physical locations, employee identities, and professional expertise. While customers were told their money was safely segregated, funds were instead commingled with the defendants' assets and routed through offshore bank accounts, including accounts controlled by Cohen. In total, approximately 95% of customers suffered financial losses. In a parallel criminal case brought by the U.S. Attorney for the District of Maryland, Cohen pleaded guilty to wire fraud and conspiracy to commit wire fraud. On August 15, he was sentenced to 66 months in prison and ordered to pay a $7 million penalty. The disgorged funds are slated for distribution to affected victims through a fund administered by the U.S. Department of Justice. The CFTC strongly advises traders to check the registration status of any financial trading firm through the National Futures Association's BASIC database before transferring funds, and warns against unregistered platforms that promise guaranteed profits or manipulate trading software.