Binary options scams are becoming increasingly common in Singapore. These scams typically involve someone offering you a high return on investment for a binary option, which is a bet on whether a particular asset will go up or down in price. However, once you invest your money, you may find that the broker refuses to pay out your winnings or disappears with your money altogether.
Examples of past binary options scams
Binary options scams were first reported in Singapore around 2009. One of the earliest well-known cases was when Francis Xavier Pravin Dhruv cheated many South-East Asian expatriates out of their savings. He used false addresses such as Admiralty Place and Shenton Way to lure people into investing with him. His victims lost USD 2 million in total before he disappeared.
In 2012, another broker called Omega Option made headlines when it refused to pay its investors after causing massive losses for them. Many people accused Omega Option and similar brokers of being illegal because they did not require their investors to go through proper registration procedures.
The Monetary Authority of Singapore (MAS) eventually stepped in to regulate the industry and introduced new rules which required all binary options brokers to be licensed and regulated. This led to a crackdown on scam brokers, and many were shut down. However, new scams continue to emerge every year.
How to Avoid Becoming a Victim of Binary Options Scams
Here are some suggestions on avoiding being a victim of binary options fraud.
Do your research
Before investing in binary options, do your research to ensure the legitimate broker you are dealing with. Many online resources can help you do this, such as the Financial Conduct Authority (FCA) website.
Use a regulated broker.
It is important to only invest with a regulated broker. Regulated brokers must adhere to strict standards and are subject to regular audits. It helps to protect investors from fraud and ensures that your money is safe. Keep your investment low
It is always best to start with a small investment until you are comfortable with the process. It will help to minimize your risk if things go wrong.
Use a demo account
If you are new to binary options, it is good to use a demo account to practice before investing real money. A demo account allows you to trade fake money and helps you to learn the ropes without risking any of your cash.
Take advantage of warnings and alerts.
Many regulators issue warnings and alerts about binary options scams. Make sure you keep up to date with these alerts so that you can avoid any brokers that may be operating illegally.
Check for complaints
Using a regulated broker is also good to see if any past or current customers have left complaints. Many sources allow you to check for this information, including the FCA website and the Financial Ombudsman Service (FOS) website.
Avoid trading with an unregulated broker.
Unregulated brokers will not protect your money, and many of them do not adhere to industry standards. Trading with an unregulated broker puts your investment at risk and may lead to significant losses. The general rule is that if a broker does not request ID verification, traders should avoid them.
What to do if a binary options broker has scammed you
If you think a binary options broker may have scammed you, there are a few things you can do. Firstly, contact your local police department and file a report. You can also contact the Monetary Authority of Singapore (MAS) or the National Trading Platform (NTP) for help.
Finally, you can contact a consumer protection organisation like the Consumers Association of Singapore (CASE). CASE may be able to help you get your money back or at least warn other consumers about the scam.
Binary options scams are becoming increasingly common in Singapore. These scams can be very costly and often result in the victim losing their entire investment. If you are a beginner trader wanting to trade options, it is recommended to contact a reputable online broker from Saxo bank for the lowest commission and excellent customer service.