The Knesset plenary approved on Monday evening, June 26, the first reading of a bill to ban Israel’s widely fraudulent binary options industry, taking another step toward shutting down the multi-billion dollar scam. All 31 Knesset members in the plenary at the time voted in favor of the bill.

Binary options are an Israel-based enterprise, which has flourished with almost no intervention by legislation or law enforcement for a decade. Fraudulent firms employ thousands of Israelis, whose activities are dedicated to bilking people around the world.

Hadash lawmaker Dov Khenin (Joint List) said he welcomed the law and commended the Finance Ministry for introducing it, calling binary options a “toxic and dangerous financial product of crony capitalism.” However, Khenin called for the proposed law to be expanded to include other fraudulent speculative financial products as well. Khenin did not specify which additional financial products he was referring to.

The proposed law states that Forex companies operating from Israel will be required to be licensed in the counties where they do business, but does not ban retail forex. The law will now go to the Knesset House Committee, which will prepare it for its second and third readings in the plenary.

Fraudulent Israeli binary option companies ostensibly offer customers worldwide a potentially profitable short-term investment. Nevertheless, in reality — through rigged trading platforms, refusal to pay out, and other ruses — these companies fleece the vast majority of customers of most or all of their investment. The fraudulent salespersons routinely conceal where they are located, misrepresent what they are selling, and use false identities.

Israeli binary options enterprises have been estimated to bring in between $5 billion and $10 billion a year, to number well over 100 companies, and to employ between 5,000 and many tens of thousands of employees.

Last month, in a move that indicated the Israel Police had finally begun to tackle the multi-billion dollar global fraud, Eliran Saada, the Tel Aviv owner of a fraudulent binary options firm, was arrested on suspicion of aggravated fraud, misrepresentation, false accounting, forgery, extortion and blackmail.

In recent months, in anticipation of the proposed law, several binary options companies in Israel have shut down, while many have relocated their call centers abroad, including to the Ukraine and elsewhere in Eastern Europe.