In a landmark court appearance, Pini Peter, a prominent figure in the binary options industry, vehemently criticized American law enforcement, media, and even his Israeli competitors, accusing them of collaborating to portray him as a criminal.
If you started Binary Options more than a few years ago, Spot Option would be no stranger to you at all. For newbies who never heard of it, treat this post as a trip down the history books.
For easy navigation, I made a clickable list of the various sections in this L-O-N-G post.
What Is – What Was SpotOption?
SpotOption was a prominent company in the binary options industry. It provided trading platforms and services to various binary options companies. Binary options are a type of financial derivative where traders speculate on the price movement of various assets, such as stocks, commodities, and currencies, within a predetermined timeframe. SpotOption’s platforms allowed these companies to offer binary options trading to their customers.
The company offered a range of tools and services, including payment platforms, risk management, and other technology solutions tailored to binary options trading. It played a significant role in the binary options market, providing the technology infrastructure that powered many binary options brokers’ operations.
SpotOption’s influence extended across multiple jurisdictions, serving as a vital player in the industry’s operations. However, the binary options industry as a whole faced controversies and regulatory challenges due to fraudulent practices and investor protection concerns. Over time, regulatory actions and legal proceedings led to the downfall of SpotOption and the binary options industry, leading to its eventual closure and the outlawing of binary options trading in various countries.
How Forex and Binary Brokers Make Money As The Counter Party
“Did we earn money when the customer lost? Yes! That was the business. It’s not shameful, it’s the business!”Pini Peter
This is nothing new. Binary Brokers and even Forex Brokers – they have always been the counter party – even when the trades are based on actual market prices. When brokers have more orders they are capable of being the counter-party, they pass it on to Liquidity Providers.
Statistically, because most retail traders are un-trained, greedy and have poor control of their emotions, they are unable to win a majority of the time, and with sub-100 payouts for winning trades, at a 50% win rate, their accounts will surely decline – if not out of reckless behavior.
By the same token, brokers go bust when there was a mistake in their algorithm, when they sold more options than they could balance out.
A Bold Stand Against Allegations
In an unprecedented testimony before the Tel Aviv District Court, Pini Peter, also known as Malhaz Pinhas Patarkazishvili, confronted allegations that his now-defunct company SpotOption engaged in widespread fraud against investors worldwide. Testifying in a preliminary hearing for a class-action suit, Peter defended his company’s legitimacy and countered claims of systematic fraud.
Why Was Pini Peter Labelled A Fraudster: An Empire of Duress
If you look at the binary option brokers of today, there’s no call-centres, no pressure-selling, no mental duress by “account managers” and they essentially do all the business operations they are supposed to do. Nowadays, traders withdraw profits no-questions asked. In fact, many brokers have worked out that despite raising payouts from what used to be just 70% a decade ago, to up to 92% – such as Pocket Option, or 95% – such as IQ Option, the business can still be sustained. And, for those traders who have a systematic approach and strategy to trading, they just benefit from this. It’s a win-win for all!
From the above section, you can already tell that the odds are already stacked against the retail trader. However, is there really a need to further stack the odds against them?
These are pictures found from the original article on Times of Israel website. They are slides from the training manual of “customer retention officers”, and how they are taught – which is arguably unethical.
The pictures below is just a nice way of saying it. Look at this later section.
“They taught us how to make people uncomfortable, how to answer objections, how to keep them on the phone.”
The training session was known as a “conversion course” and the goal was to learn how to turn a telephone lead into a customer by taking their first deposit. At his company, salespeople were not allowed to take a deposit of less than $250.
During the sales course, the company’s management gave Dan advice that haunted him later. “They told us to leave our conscience at the door.”Dan G, ex “Broker” with a SpotOption whitelabel broker, Times of Israel article The wolves of Tel Aviv: Israel’s vast, amoral binary options scam exposed
A Conspiratorial Allegation
Peter’s testimony marked a pivotal moment in the binary options saga, as he accused various parties of conspiring against him. He attributed the onslaught of accusations to a targeted effort by American law enforcement, the media, and rivals within the Israeli binary options industry. He maintained that these forces conspired to create an unfavorable narrative around his business endeavors.
But it’s true is it not? It’s still “abetment”.
Check out my recent youtube video on the “Ugly Truth About Signals” below…
The SEC’s Accusations and a Default Judgment
The courtroom drama unfolded against the backdrop of a civil enforcement action by the US Securities and Exchange Commission (SEC). The SEC alleged that Peter defrauded US investors of over $100 million through deceptive tactics. Despite these allegations, Peter did not appear in a US court to defend himself, leading to a default judgment against him and SpotOption. The judgment ordered substantial financial penalties, but Peter denied any wrongdoing.
A Controversial Ban and Its Aftermath
Peter’s testimony also touched on the binary options industry’s contentious history. He addressed the controversial ban imposed by the Israeli Knesset in 2017, which effectively outlawed the industry. Peter claimed that his company’s success drew the ire of larger financial entities, leading to the industry’s eventual ban. He portrayed the ban as a result of a concerted effort by competitors to eliminate his business.
We also recall that when CYSEC came down on various brokers, it was because many were under-capitalised to be able to honour withdrawals of profit! It’s essentially the same problem as online casinos in third world countries. While the house MOSTLY wins, it should still have the means to pay when the PLAYER WINS.
I did a video on this a long time ago.
The Rise and Fall of SpotOption
SpotOption, once a dominant force in the binary options world, provided trading platforms to numerous binary options companies. Its vast reach and influence made it a central player in the industry. Peter defended SpotOption’s role as a technology company, arguing that its offerings were used by various entities, but it did not directly engage with end customers.
While that MAY be true, the training provided was via SpotOption-designed slides.
A Portrait of Resilience and Adversity
Throughout his testimony, Peter offered glimpses into his personal journey. He detailed his upbringing as an immigrant from the Soviet Republic of Georgia and his early ventures in the currency exchange business. Despite personal tragedies and setbacks, Peter displayed resilience and determination in building his businesses.
The Path Forward
As the court proceedings unfold, the fate of the class-action lawsuit against SpotOption remains uncertain. Peter’s passionate defense and critique of the allegations have cast a spotlight on the intricate web of the binary options industry, regulatory actions, and the challenges faced by both the accused and the accusers. The courtroom drama continues as legal minds seek to unravel the truth behind the complex narrative surrounding binary options and Pini Peter’s role within it.
The Binary Options Business Plan – Then and Now
I am happy to have witnessed the development of binary options all through these years. I have seen how the bad actors have left the industry, and in its place, brokers who focus on compliance and functionality.
A decade ago, the business model was – brokers have high initial deposit minimum, and account managers keep throwing bait for more investment, and finally make it hard to withdraw.
Nowadays, brokers promote trial, request the most minimum deposit, pay withdrawals on time. They believe that when customers have a good experience, they’ll naturally return with more investment. Winning or losing – is totally in the customer’s hands. 输也输的爽快 (Chinese: even when you lose, lose with no ill feelings)Julian, Binary Lab Founder
Today’s brokers have done away with call-centres, and outsource their help desks to agencies like Zendesk or similar, and focus on offering good support and prompt service.