Israeli ministers on Sunday approved a bill that out outlaw the binary options industry, The Times of Israel, which first exposed fraud in the industry, reports.
The Ministerial Committee on Legislation approved the bill immediately. The legislation will now move on to the Knesset plenary for a reading before being debated by the Knesset Finance Committee. It will then go through a second and third reading.
The law, if passed, would allow the Israel Securities Authority to prosecute and imprison anyone peddling the binary options financial scam from Israel to anyone, anywhere in the world.
Shmuel Hauser, Chairman of Israel Securities Authority, drafted the law with the Justice Ministry and attorney general.
“Beyond the severe economic harm to citizens around the world, marketers of binary options are increasingly causing reputational damage and inflaming anti-Semitism towards Jews and Israelis,” Hauser said in a statement.
Binary options companies in Israel have a history of scamming users out of most or all of their money by refusing to pay out, rigging trading platforms and employing other schemes. Salespeople often use false identities, hide their location and misreprsent the platforms they sell, according to Times of Israel.
Eli Groner, director-general at the Prime Minister’s Office, said on Sunday that they are continuing “actions against binary options that cause damage to Israel’s image in the world.”
“After we saw that other countries are not outlawing binary options, Israel is taking responsibility in order to prevent the defrauding of innocent people,” said Groner.
Canada has also considered banning binary options. The comment period on the proposal has closed in a few provinces, and it still unclear whether the proposed ban would go into effect. Securities regulators in Alberta and Quebec have yet to publish statements on the implementation of the ban.
If Israel’s law is passed, violators could face up to two years in prison. If money laundering is involved, violators could face up to ten years in prison.
Regulators in Israel have received numerous complaints from binary options traders about their losses. Israel already banned the sale of binary options to Israelis, and was the first country to do so.
According to a report from Reuters, the owner of an Israeli binary options firm was arrested last month on suspicion of extortion and fraud after a foreign investor reported a loss of over $500,000. The arrest was the first since Israeli authorities announced the crackdown on binary options.