The Collapse of a Fraud Empire: Infighting Among Binary Options Scammers

The Rise and Fall of Israel’s Binary Options Industry

In 2016, Israeli investigative journalist Simona Weinglass shed light on the widespread binary options fraud in her groundbreaking series “The Wolves of Tel Aviv.” Her reports uncovered that tens of thousands of Israelis—mainly in Tel Aviv—had been working in fraudulent trading operations, with the binary options industry once hailed as a pillar of Israel’s tech boom.

Weinglass repeatedly criticized political inaction in Israel, arguing that it enabled the exploitation of countless global victims. Following the industry’s collapse, the key figures behind the scams are now entangled in a vicious legal, reputational, and internal war—a battle that could finally bring many of them to justice.

Global Crackdown and Legal Reckoning

Since 2018, binary options trading has been outlawed in most countries, leading to the swift collapse of the once-thriving fraud networks. Regulatory agencies and judicial systems across North America, Europe, Asia, and Australia have ramped up efforts to bring perpetrators to justice.

In the U.S., authorities such as the CFTC and the Department of Justice have led the charge with high-profile prosecutions connected to the Yukom case. Investigations confirmed that binary options platforms never engaged in legitimate trading. Dashboards displaying fictitious earnings and bonuses were simply tools of deception.

Meanwhile, in Europe, the case surrounding Gal Barak—dubbed the “Wolf of Sofia”—has emerged as a key legal battleground. Barak’s associate Uwe Lenhoff was detained, while Barak himself remains in Sofia awaiting extradition to Austria. Numerous others are under criminal investigation across jurisdictions.

Gal Barak: From Tel Aviv to Sofia

By 2015, many Israeli operators had relocated their operations to Bulgaria, including Gal Barak. Through his companies E&G Finance EOOD and E&G Bulgaria EOOD, Barak managed large-scale scams such as XTraderFX, SafeMarkets, OptionStarsGlobal, and Golden Markets. These scams were supported by offshore boiler rooms scattered across Europe.

Sofia quickly became the epicenter of European investment fraud, with local institutions like Investbank reportedly facilitating money laundering. Some of the illicit profits were reinvested into Bulgarian real estate ventures.

Tradologic: A Fraud Hub Disguised as a Tech Provider

In addition to managing scams, Barak was also connected to Tradologic, a Bulgarian software provider for binary options trading. At its peak, Tradologic served over 240 white-label clients—many of whom were later exposed as scam operators.

Tradologic in Numbers (2016–2017):

Archived versions of the Tradologic website (www.tradologic.com) listed client names such as Option888, OptionBit, SpearTrader, and Binex—all of which are now linked to ongoing criminal investigations. Tradologic’s client base effectively formed a directory of Europe’s binary options fraud network.

Internal Conflict: The Tradologic Dispute

In early 2018, internal tensions erupted between key stakeholders of Tradologic. The core dispute—centered on vast sums of money—involved Gal Barak, Vladislav “Vlad” Smirnov, Uwe Lenhoff, and Gery Shalon on one side, and the Israeli founder of Tradologic on the other.

Shalon, known for his role in the JP Morgan hack, invested in Tradologic with Smirnov in 2014. After his 2015 arrest in Israel and extradition to the U.S. (press release), Shalon entered a confidential plea deal and reportedly paid over $400 million in restitution. He was released in 2016 but remains under U.S. surveillance.

Serbian Disputes and Money Laundering Allegations

Simultaneously, Gal Barak’s group clashed with Serbian entrepreneurs over Global Payment Solutions Podgorica DOO—a company allegedly used to launder investor funds across multiple scam operations.

PandaTS Accusations: A New Battlefield

In another twist, Gal Barak shifted blame to PandaTS, another Israeli software provider he used alongside Tradologic. Barak alleged in statements to authorities that PandaTS was responsible for trade execution and fund management, implying they bore primary responsibility for investor losses.

According to Barak, platforms like SafeMarkets and XTraderFX merely collected deposits and transferred them to PandaTS. He even recommended a house search to obtain transaction data from PandaTS servers. However, PandaTS co-founder Maor Lahav strongly rejected these claims, denying any role as a broker or fraud enabler.

In a suspected attempt to manipulate public perception, Barak’s team launched several fake news platforms to disseminate reports targeting PandaTS and other rival actors. This marked the third front in an increasingly chaotic scammer war.

Consequences and Criminal Fallout

The infighting escalated rapidly. Uwe Lenhoff was arrested in early 2019. Gal Barak is facing extradition, while the founder of Tradologic has also become a person of interest in several international investigations.

Despite its origins in deception and fraud, the internal collapse of this network is proving valuable. Competing parties are leaking documents, data, and legal testimony—helping law enforcement agencies trace stolen assets and build strong cases.

Can Victims Become the Unexpected Winners?

As law enforcement agencies receive an influx of insider information, the opportunity for justice—and perhaps even restitution—becomes more realistic. Without the infighting among the fraudsters, much of this evidence might never have surfaced. Ironically, their unraveling could benefit the very people they once exploited: the defrauded retail investors.