Ongoing Legal Reckonings in the Binary Options Industry
The legal system is currently seeing a wave of civil and criminal cases targeting figures from the notorious binary options scene. In the United States, Israeli boiler room operator Lee Elbaz was found guilty of investment fraud in August 2019 and sentenced to 22 years in prison, along with an order to repay $28 million to defrauded investors. Meanwhile, in Austria, Gal Barak, another Israeli national, received a four-year prison sentence without probation, with seized funds designated for victim restitution.
North American regulators, including those in the United States and Canada, are pursuing legal action against the Cartu Brothers—David, Joshua, and Jonathan Cartu—for their roles in orchestrating wide-scale binary options fraud. At the heart of these proceedings are allegations of systematic deception and transactional manipulation.
A Closer Look at the Manipulation Tactics
How the Cartu Brothers Engineered Deception
A recent complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) outlines in great detail the fraudulent practices employed by the Cartu Brothers and their network, operating both in Israel and the U.S. Through a white label broker platform, they manipulated customer trades on multiple levels.
These manipulations mirrored techniques revealed in the Lee Elbaz trial and the Vienna Cybercrime Trial of Gal Barak, including:
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Falsifying clients’ risk profiles
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Altering strike prices just before trade expiry
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Enabling fake transactions through backend controls
The Cartus’ proprietary software was reportedly built with manipulation capabilities at its core, allowing brokers to predetermine the outcome of trades, unbeknownst to clients.
SpotPlatform Alterations
One of the key fraud mechanisms was the SpotPlatform, which allowed brokers to interfere with trade execution. During parts of the period under investigation, Jonathan Cartu and/or the Peretz Brothers allegedly authorized outcome adjustments, ensuring losses for customers and profits for the operators.
Gal Barak’s Confession
During his trial in Vienna, Gal Barak admitted that customer transactions were consistently rigged using white-label software provided by his partners. His admission likely reduced his sentence, preventing an additional two years of imprisonment.
Remote Control and Unauthorized Access
Use of Anydesk for Client Account Takeover
Another manipulation tool was Anydesk, a remote desktop application. This software enabled agents to directly access investors’ computers, executing trades without consent. Since actions were performed from the victim’s device, logs showed the client’s IP address, giving the illusion of a legitimate, self-initiated transaction.
Deceptive Boiler Room Practices
Human-Level Manipulation and Psychological Pressure
The agents in these operations were often hired under false identities, complete with fabricated resumes, to pose as financial experts. They employed psychological manipulation to convince clients of:
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Guaranteed returns
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Zero-risk investments
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Insured trading
They also used bonuses as traps, preventing clients from withdrawing their funds and luring them into additional deposits. These tactics were part of a broader playbook designed to extract as much money as possible from unsuspecting victims.
Accountability and Asset Recovery
Authorities Target Key Players
Legal efforts are intensifying against the Cartu Brothers, Gal Barak, and their collaborators. Multiple lawsuits are underway across jurisdictions with a shared goal: to recover stolen investor funds and bring fraudsters to justice.
Brands and Lavish Spending
According to the CFTC complaint, the Cartu Brothers generated tens of millions in illicit profits through their brands:
|
Brand Name |
Operator |
|
BeeOptions |
David Cartu |
|
Glenridge Capital |
Joshua Cartu |
|
Rumelia Capital |
Jonathan Cartu |
These funds were reportedly used to finance luxury cars, real estate, and extravagant lifestyles. Similarly, Gal Barak spent investor money on high-end vehicles, watches, and real estate, and allegedly funneled funds into online gambling ventures linked to his associate Gery Shalon.
The Endgame: Justice for Victims
As regulatory bodies continue to unravel these fraud networks, the message is clear: the era of impunity is coming to an end. The financial predators behind these schemes will be held accountable—and investors must be repaid.