City of London police warned that more and more UK consumers have become victims of binary options investment scams. The police disclosed that people have lost almost £60 million on binary options trading since 2012. To weed out these binary options frauds, the UK police raided 20 offices as part of a crackdown, launched by the government earlier this week. According to the police, these binary options brokers gulled 700 people, who lost £18 million for the first half of the year.
Binary options are a form of fixed-odds betting, where players can place bets on price movements in everything, including currency. Binary options traders often use social media to advertise their betting services. The binary options scam scheme encourages players to create accounts with scoundrel brokers. Following early trading wins, they start to force punters to invest higher amounts in their accounts. In case the customers would like to withdraw the money from their accounts, they are unable to contact the broker. The Financial Conduct Authority (FCA) urged people to stay vigilant about any potential binary options betting scams and to report any suspicious brokers.
The police’s reports revealed startling figures considering the amounts, which the victims lost. As aforementioned, people lost approximately £60 million on binary options betting since 2012. For the first six months of the current year, there are 700 victims, who lost £18 million, which means an average loss of £25,916 per person. It was estimated that with the current pace of losing money on binary options betting, this year’s total amount of losses is to exceed the previous one. The investigators commented that the fraud is affecting many people, especially the young ones. What is even more shocking is that the detectives even believe that the problem is more deeply rooted.
What Does the UK’s Law Say
The United Kingdom was one of the first European countries to legalize financial betting. At this moment, binary trading is accepted as legal in the UK and it is under the jurisdiction of the Gambling Commission. Currently, officials consider transferring binary options companies under Financial Conduct Authority (FCA) jurisdiction.
There are two types of binary trading brokers legal in the United Kingdom. The first group holds licenses issued in the United Kingdom, while the second group of brokers is licensed to offer such betting options by a different European country with a licensing system compatible with that of the UK. Both of these kinds of brokers are allowed to legally provide binary betting services throughout the United Kingdom. In case a broker does not hold a license from the UK or some other country member of EU, the broker is unlawfully operating.