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CFTC: Federal Court Orders Florida Man And Foreign Defendants To Pay $7 Million For Role In Fraudulent Binary Options And Digital Asset Scheme

Date 17/11/2021

The Commodity Futures Trading Commission today announced that Judge Darrin P. Gayles of the U.S. District Court for the Southern District of Florida issued orders granting permanent injunctions against Daniel Fingerhut, a resident of Miami, Florida, and Itay Barak, Tal Valariola and Digital Platinum Limited (DPL), residents of Israel, and requiring them to pay a combined $7 million in disgorgement and civil monetary penalties for violations of the Commodity Exchange Act (CEA) and CFTC regulations. The orders also impose permanent trading and registration bans on Fingerhut, Barak and Valariola, among other injunctive relief.


The court’s orders stem from a CFTC complaint filed on May 5, 2020, charging Fingerhut, Barak, Valariola, DPL and others with fraudulently soliciting tens of millions of customers and prospective customers to open and fund off-exchange binary options and digital assets trading accounts. These accounts traded foreign exchange currency pairings, metals, and digital assets through websites operated by unregistered binary options and digital asset brokers. [See CFTC Press Release No. 8162-20]

Case Background

The orders find that Fingerhut, Barak and Valariola created, disseminated and/or facilitated the use of fraudulent solicitations in emails, websites, and video sales letters promising free access to purportedly successful automated trading systems that traded on behalf of clients in binary options involving commodity interests and digital assets. These solicitations misrepresented hypothetical and fictitious trading results as real results, and used fabricated customer testimonials.

The order against Fingerhut also finds that he knowingly made false statements to the CFTC in connection with the investigation into his role in the fraud. 

The orders require Fingerhut to pay $400,011 in disgorgement and a $600,000 civil monetary penalty, and Barak, Valariola and DPL to pay $3 million in disgorgement and a $3 million civil monetary penalty.

The CFTC continues to litigate this matter against two additional entity defendants and one relief defendant. 

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

The CFTC thanks the Israel Securities Authority and the Financial Supervision Commission of Bulgaria in connection with this matter. 

The Division of Enforcement staff members responsible for this case are Joseph Platt, Candy Haan, Joseph Patrick, Ray Lavko, Allison Passman, Scott Williamson, and Robert Howell.

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CFTC’s Binary Options Fraud Advisories

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Binary Options and Fraud Advisory, which alerts customers to this type of fraud and list simple ways to spot it.

 

The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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