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SEC wins another round in its fight against binary options perpetrators

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The U.S. regulators, as well as the prosecutors, are still fighting against the consequences of the fraudulent binary options that were only banned by most countries in 2018. EZTrader was one of the big boys in the early binary options scene with a strong business in the U.S.In November 2016, the U.S. Securities and Exchange Commission (SEC) issued a final Commission order against binary options scheme operator EZTD, Inc which required them to disgorge $1,515,858 plus interest and pay a civil penalty of $200,000, plus interest.

EZTD negligently misstated or omitted to state the true financial risk associated with investing in the firm’s binary options […] the vast majority of EZTD’s U.S. customers did not earn a profit trading the firm’s binary options with monies they had deposited to their EZTD accounts.

SEC Order in the matter of EZTD Inc (Nov 2016)

The Court Case

EZTD failed to make required payments and thus did not comply with the Commission Order.

According to an update posted by SEC on its website in November 2017, EZTD had paid a total of only $738,980 disgorgement into the Fair Fund. Consequently, SEC saught a Court order instructing EZTD to disgorge the balance of the $1,515,858 plus prejudgment interest of $57,691, and civil penalty of $200,000 it was required to pay.

On May 29, 2019, the Court decided in favor of the SEC and ordered EZTD to pay to the Commission the outstanding amount of $834,569.14 in disgorgement (plus interest) and a civil money penalty of $200,000 (plus interest). The respondent is also ordered to cease and desist from committing or causing any violations and any future violations of Section 15(a)(l) of the Exchange Act and Sections 5(a), 5(c) and 17(a)(2) of the Securities Act.

The binary options scheme

EZTD Inc., the parent company of binary options brokerage EZTrader was run by the Israeli Shimon Citron. He founded the brokerage in 2001 and became its CEO in 2008. In 2014, the company raised $3.94 million and saw its stocks traded at OTCQB market. In this year, revenues quadrupled over 2013, reaching $7.95 million. EZTD is a registered Delaware corporation with a principal place of business in Tel Aviv, Israel and Nicosia, Cyprus. The full story on EZTD can be read on FinanceMagnates.

EZTD operated binary options brands EZTrader (at website eztrader.com), GlobalOption (globaloption.com) and EZinvest (ezinvest.com), via CySEC regulated subsidiary WGM Services Ltd.

The SEC found that from June 2011 to August 2014, EZTD made offers and sales of binary options to U.S. customers, through two of its online trading platforms, eztrader.com and globaloption.com. These binary options, however, constituted securities under the federal securities laws. EZTD failed to register any of its offers and sales of binary options to U.S. customers and it failed to register with the Commission as a broker-dealer.

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