The Commodity Futures Trading Commission today announced the United States District Court for the Northern District of Illinois entered a consent order requiring Yakov Cohen to disgorge $7 million in ill-gotten gains received from his participation in a fraudulent binary options scheme.
The order resolves the allegations against Cohen in the CFTC’s August 12, 2019 lawsuit against Cohen and co-defendants Yossi Herzog, Lee Elbaz, Shalom Peretz, Yukom Communications Ltd., Linkopia Mauritius Ltd., Wirestech Limited d/b/a BigOption, WSB Investments Ltd., d/b/a BinaryBook, and Zolarex Ltd, d/b/a BinaryOnline. [See CFTC Press Release No. 7995-19] The lawsuit is pending against the co-defendants.
Case Background
The order finds, beginning on approximately March 26, 2014 and continuing through approximately September 2017, Cohen and his co-defendants fraudulently solicited individuals in the United States and elsewhere to trade binary options through websites using fictitious trade names such as BigOption, BinaryBook, and BinaryOnline. The defendants falsely represented their interests were aligned with their customers’ interests, when they actually profited from their customers’ losses. The defendants also falsely claimed the offered binary options were actual transactions subject to objective market conditions, when they were merely book entries whose outcomes were manipulated by the defendants or others acting at their request.
In addition, the defendants misrepresented their financial expertise, basis for compensation, physical location, and the identity of their employees and agents; falsely claimed customers’ funds were “safeguarded separately” when in fact they were commingled with the defendants’ own funds and transferred through off-shore bank accounts, including those controlled by Cohen; and falsely stated the binary options they offered were profitable, when in fact approximately 95% of customers lost money. Cohen received at least $7 million from the scheme.
Parallel Criminal Action
On February 13, 2019, Cohen was indicted by the United States Attorney for the District of Maryland and charged with wire fraud and conspiracy to commit wire fraud on the same conduct charged in CFTC’s complaint. [United States v. Yakov Cohen, 19 cr 77-1 PX (D. Md. 2024)] After pleading guilty to the charges, on August 15 Cohen was sentenced to 66 months in prison and ordered to pay a $7 million penalty. The disgorged funds will be returned to customers who suffered losses in connection with the fraudulent conduct through a victim fund administered by Department of Justice.
The CFTC thanks and acknowledges the assistance of the Australian Securities and Investments Commission, Financial Supervision Commission of Bulgaria, Central Bank of Hungary, and Israel Securities Authority.
The Division of Enforcement staff responsible for this case are Elizabeth N. Pendleton, Heather Dasso, Stacie Pan, Elizabeth Streit, Scott R. Williamson, and Robert T. Howell.
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Fraud Advisory
The CFTC’s Office of Customer Education and Outreach and the SEC’s Office of Investor Education and Advocacy have issued a joint investor alert to warn about fraudulent schemes involving binary options and their trading platforms. The alert warns customers that the perpetrators of these unlawful schemes may refuse to credit customer accounts, deny fund reimbursement, commit identity theft, and manipulate software to generate losing trades.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers may be 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 Commodity Exchange Act.
