Citrades CEO Pleads Guilty to Running $8 Million Binary Option Scam
Jason Scharf, an Israeli-American operator of the now-defunct binary-options brand Citrades, pleaded guilty to his role as CEO of the company that swindled more than $8 million from at least 8,000 victims, most of them located in the United States.
Jason Benjamin Scharf, 37, of Los Angeles, California, has been hit with fraud charges for violating trading regulations and defrauding his customers. He pleaded guilty to one count of conspiracy to commit wire fraud, the US Justice Department said today.
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CITrades is no longer doing business via the internet, at least not while using the names under which it has been sanctioned and banned. The company is believed to have operated a Ponzi scheme resulting in the loss of all funds for all the investors.
The initial legal action in 2017 describes CITrades charges as allowing US customers to trade binary options products prohibited under the CFTC’s rules. The order also finds that Scharf defrauded customers by making false representations in his solicitations. Scharf did his business through Citrades.com and AutoTrading Binary.com, whilst developed and sold autotrading binary options systems that don’t actually work.
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The wolves of binary options
The agency says that rather than allowing his clients to trade binary options, Scharf misappropriated almost $8.3 million of client funds. The defendants falsely told their customers, among other claims, that they offer a safe investment with steady and guaranteed returns.
The detailed complaint alleges that the fraud scheme has been going on since at least February 2013 and involved fraudulent ad campaigns that used false promises to induce clients to send their money to participate in binary options trading, but in fact, they were duped into a Ponzi scheme.
The justice department’s statement contained a detailed description of how the scam operated. It says: “Scharf further admitted that while Citrades marketed itself as a trading platform through which binary options could be traded, investors were not actually trading with other investors. Instead, they were investing in transactions whose parameters, including the “strike price” associated with the binary option, were set by a separate company that served as a platform provider.”
It further added that although the man was prohibited from destroying his records, to which the authorities now have access, he deleted “potentially incriminating emails from an account that he used to conduct Citrades-related business.”
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