Investors need to beware of fraudsters pretending to be IIROC-regulated investment dealers and trying to illegally sell binary options and cryptocurrencies, said the self-regulatory organization (SRO) on Thursday.
IIROC says investors have contacted it about organizations that claim to be regulated by the SRO but aren’t, including:
- CDFtradeoption.com, operated by Westrade Holdings, Inc.; and
The CSA banned binary options in 2017. The organization announced the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options, which makes it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days.
IIROC says binary options cannot be offered or sold to retail investors in Canada.
“We urge investors to avoid ‘get rich quick’ scams and to be informed and intelligent consumers when shopping for investments or investment advice,” said Andrew J. Kriegler, president and CEO of IIROC, in a release.
Read: CSA bans binary options
Binary options take the form of a wager in which investors bet on the performance of an underlying asset, often a currency, commodity, stock index or share. The time frame on this bet is usually very short, sometimes hours or even minutes. And when the time is up, the investor either receives a predetermined payout, or loses the entire amount. In many instances, no actual trading occurs and the transaction takes place for the sole purpose of stealing money.
Sales of binary options usually start as online scams, specifically in social media that point to seemingly legitimate websites, the release said. Victims have also received unsolicited text messages or phone calls.
Investors have also contacted the SRO about companies selling bitcoin and other cryptocurrencies, said IIROC. These businesses also claim to be regulated by IIROC but aren’t. Some ask investors for dates of birth, social insurance numbers, and banking information for the purposes of identity theft.
IIROC recommends that investors contacted by anyone offering binary options should immediately report the incident to their provincial securities commissions.