In recent months, CTIF-CFI found that fraud related to the trade in binary options is being committed. Many investors are approached to enter into contracts with binary options. They have to put money on a prediction of the short-term (ranging from a few minutes to a few days) evolution of the price of assets (share index, foreign currency or commodity). If the prediction proves correct, the investors get their money back and gain a profit. If they are wrong, they lose all of the invested money.
Apart from the fact that binary options are highly speculative and entail great risks, some providers of binary options do not have the required license to operate as an investment company or credit institution, and they may not provide banking and/or investment services in or from Belgium. Nor do they publish a prospectus approved by the Financial Services and Markets Authority (FSMA), as required for each public offering of investment vehicles in Belgium.
Despite their sound appearance, several platforms that trade in binary options are operated by unlicensed companies led by fraudsters that operate without a license, forge the results of the platforms or embezzle the invested funds. In such cases investors never get their money back given that these illegal service providers are generally located abroad.
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