GB’s note: This is a great story from ABC that boils down to that old saying: if it sounds too good to be true, it is. It’s true that sometimes trading can be easy but what precedes that is a stack of groundwork that includes lots of reading, research and structured screen time.
Having a long history in options trading, the concept of a binary option was interesting. It has been used by some institutions on an OTC basis long before it hit the retail world, but the retail version was garbage. You could see this with knowledge of basic pricing and option spreads. In fact, armed with that knowledge you would not need someone to sell you anything. You could construct something very similar yourself – and all with better risk:reward AND control over your trading funds.
This crap should not put a black mark on options at all. Options are fantastic tools created for risk management and speculation. Binaries on the other hand look like they are on their way out.
Here is the full story:
Shlomo Blitz worked inside Israel’s binary options industry where he helped to scam victims — including Australians — out of their money.
Binary options is a highly speculative form of trading, which experts and regulators have likened to gambling. And many unlicensed operations are just out-and-out scams.
In his own words, Mr Blitz talks us through how he did it.
He left the industry in disgust and now spends his time trying help victims of binary option fraud.
‘The scam starts the moment I get on the phone with you’
“Obviously I’m not saying: ‘Hi, this is Shlomo speaking from a office here in Tel Aviv.’
“No-one in the industry would actually use their real name and if they do they’ll use a fake family name. My made up name was Scott Martin.
“Whoever did the morning shift would be calling places like New Zealand, Australia, Singapore, Malaysia — you know the whole east side of the world.
“And then the evening night shifts you would call Europe, America, Canada and so on.”
A lot of the leads would be Australians for a few reasons — Australians are easier to talk to, they are polite people, they are nice.
“I wouldn’t say they these were easy targets, but they were definitely good targets.
“I’d come in, I’d have my list of leads, start calling the people, selling to them.
“I’d also teach them how to trade on the financial market.”
“You know the movie The Wolf of Wall Street [and] how it’s like a party and people are just going crazy and having a lot of fun? It’s similar.”
“Obviously, you don’t have don’t have any drugs or prostitutes or anything like that, but you have very high music, high energy, alcohol, depending on the company.
“At the end of the day, you walk in and it is very fun.”
‘You’re selling a person this dream that doesn’t exist’
“You tell him he’s going to get rich and he’s going to make a lot of money, and we’re going to help him.
“That’s a big part of the scam.
“When the client wants to withdraw his money, then he starts to hear all these stories of why he can’t.
“That’s where the scam really occurs.
“If you have an account with $10,000 in there, that’s an illusion, because that money, that’s not real money, it’s all a big charade.
“The money that you have sent has gone.
“You can be sure that money was already transferred into 10 different accounts somewhere else around the world.”
‘There was basically a five-call strategy’
“On the first call you don’t even talk to him about money, it’s like forbidden.
“And from there you go into the second call, and on the second call you’re starting to really trade.
“And once you’re really showing this person some profit and he’s really starting to trust you, you are going to call the person and be like ‘you know, there’s this great position coming right now’ and start getting him all psyched up about it.”
Mr Blitz said he would tell scam victims: “It could be inside information, you know.”
“It doesn’t really matter where this information came from, but it’s a crazy, crazy opportunity and you’ve got to get in on this.
“It’s a very big amount that you can go in on. There’s no chance you lose this.”
‘You are basically telling the person you can’t lose this’
“And then what happens is the guy says: ‘Okay, how much is it?’
The reply: “I don’t know, a few hundred thousand dollars or whatever.”
“He puts the money in, you go into that trade.
‘He thinks you’re a genius’
“Now what happens is you so-called win that trade — that’s it, you won the person over, he thinks you’re a genius.
And then the person is yours. Whatever you tell him to do, he’ll do that.
“When I look back at it today, when I was inside, I looked at it as a very grey area.
“You’re telling yourself this story over and over, that we’re not really scamming people.
It takes a long time when you’re in it as a worker, as an employee, to really grasp, understand that this is a scam — a flat-out scam.
“Once I understood that this is just flat-out a scam — it’s not grey, it’s not black and white, it’s black; you know it’s a scam — once that happened, that was when I got up and left.
“I actually went to therapy, like, a whole year.
It just wrecked me from the inside, it just kind of ate my soul.
“Like a junkie has to clean himself up from the drugs, it’s kind of like that.
“I felt like everything inside me was dirty.”