To raise awareness and protect Canadians from binary options scams, the CSA has launched a resource website, which explains to investors how the scams work, how to report fraud and how to protect themselves. One method of protection is checking sellers to see if they’re registered. They likely won’t be, because no registered people or firms are permitted to trade binary options in Canada.
Binary options take the form of a wager in which investors bet on the performance of an underlying asset — often a currency, stock index or share. The timeframe on the bet is typically very short, sometimes hours or even minutes. When the investment period is up, the investor receives a predetermined payout or loses the entire amount.
The overwhelming majority of binary options sites are rigged to lure in victims with small early returns. In many instances, no actual trading occurs, and the entire interaction takes place for the purpose of stealing money. Once larger sums are invested, the losses begin to spiral, often through unauthorized credit card withdrawals and requests to send money offshore to an unregistered firm. Once a victim loses money, it’s almost impossible to recuperate those losses.
In addition to creating the new website, the CSA’s binary options task force works with online advertisers and mobile companies to eliminate binary option advertising and mobile apps in Canada. The task force co-ordinates efforts with international organizations and governments to create and maintain a system to share and track fraudulent activity across the country, and it works closely with the fraud teams at major credit card and financial institutions to cut off funding mechanisms.
Read: Inform clients about these nefarious threats
“Binary options fraud is a leading type of investment fraud facing Canadians today,” says Jason Roy, chair of the CSA binary options task force and senior investigator with the Manitoba Securities Commission, in a release. And sellers have no specific targeted victim profile — every age, investor skill level and gender has been affected.
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