Tradorax: Fraud Allegations and Platform Shutdown

The September 2017 Closure of Tradorax and Resulting Customer Losses

In September 2017, the website Tradorax posted a message stating that it had ceased all activities due to regulatory issues and would no longer provide services to clients. No further instructions were given to customers regarding the retrieval of their funds, and the platform went offline. Prior to this closure, Tradorax had been encouraging savers to place bets on whether shares or currencies would rise or fall in value, a type of trading known as binary options. Earlier in 2017, lawyers and savers had alleged to The Independent that dozens of people’s accounts were being frozen on websites including Tradorax, and hundreds of investors, many of them pensioners, were reportedly being refused payouts after investing through the platform.

Why Binary Options Platforms Like Tradorax Operated Without Regulation

Lawyers and personal finance experts speaking to The Independent in July 2017 explained that the government was unable to regulate the binary options market effectively because even legitimate platforms were not controlled by the Financial Conduct Authority, the United Kingdom’s main financial regulator. Some binary options trading platforms were regulated by the UK Gambling Commission, but this only applied if the firm had gambling equipment physically located in the country. Many platforms, including Tradorax, had contact addresses listed on their websites that were outside the United Kingdom, and this regulatory gap meant that investors had limited protection when using such platforms, making customer complaints difficult to pursue and fund recovery unlikely in cases of fraud.

The Sixty Thousand Pound Losses of Pensioner James Hellis

One documented victim of Tradorax is James Hellis, a former self employed IT worker and pensioner from the United Kingdom who claimed that he had invested a total of nearly sixty thousand pounds through Tradorax over several months. He was assigned someone who identified themselves as a broker to trade on his behalf, and this person made a series of investments over time while encouraging larger deposits. In December 2016, Mr. Hellis filed a request with the platform to withdraw his money, the majority of which had come from his pension fund, but the request was denied and his account later appeared to have been blocked.

Because Mr. Hellis had paid for some of the investments using credit cards, he raised a chargeback dispute with his banks, but they were unable to help him. He also reported the matter to Action Fraud, the national reporting centre for fraud and cybercrime, and to the Financial Ombudsman Service, which was set up by Parliament to resolve problems with financial services. Neither organization was able to assist him in recovering his funds, leaving him with no formal recourse.

Underreporting of Binary Options Scams Across the United Kingdom

In the year ending May 2016, the most recent period for which figures were available at the time of reporting, the National Fraud Intelligence Bureau reported having received 305 reports of binary options scams, or approximately 27 reports each month. However, a lawyer representing victims told The Independent that the true number was likely to be significantly higher, potentially running into the thousands each year. The lawyer explained that victims are frequently too embarrassed to come forward and admit to being conned, and he described binary options fraud as possibly the biggest financial scam in the world, with the gap between reported and actual cases suggesting that many victims never seek help.

How UK Pension Freedom Rules Made Retirees Vulnerable to Scams

Experts have noted that pensioners may be particularly tempted to try binary options trading because of changes to regulation introduced in April 2015, under which pensioners were no longer required to buy an annuity and were able to take their entire pension as a lump sum. Suddenly having access to large amounts of cash, and with relatively low returns offered by traditional investment options, the prospect of trading binary options became appealing to some retirees. Kate Smith, head of pensions at Aegon, stated that pension freedoms had to a certain extent opened a can of worms, and that some scammers were specifically targeting pensioners by playing on people’s weaknesses.

Figures published in July 2017 by the Financial Conduct Authority showed that fifty three percent of pension pots accessed since the new rules were introduced had been withdrawn fully, and the watchdog had raised concerns about what people were doing with that money. A full report into the issues around pension freedom was due to be published the following year.

Why Banks and Regulators Could Not Help Tradorax Victims

In the case of Mr. Hellis, his banks refused to reverse the credit card charges through the chargeback process because the transactions had been authorized by him, an outcome that is common in binary options fraud cases as victims voluntarily transfer money to the platforms. Banks have limited ability to reverse such transfers even when the recipient platform is later revealed to be fraudulent. Action Fraud and the Financial Ombudsman Service were also unable to assist Mr. Hellis, as Action Fraud collects reports of fraud for intelligence purposes but does not typically recover funds for individual victims, and the Financial Ombudsman Service handles disputes with regulated financial services firms, which Tradorax was not.

Specific Risk Indicators for Binary Options Trading Platforms

The Tradorax case provides several risk indicators that investors should recognize, starting with platforms that operate without regulation by recognized authorities such as the Financial Conduct Authority, as they offer no customer protection. Contact addresses located outside the investor’s home country make legal action difficult, and difficulty withdrawing funds including denied requests and frozen accounts is a clear indicator of potential fraud. The assignment of a personal broker who encourages larger deposits over time is another common tactic used by fraudulent platforms to build trust before refusing withdrawals. Investors should also be aware that high pressure sales tactics and promises of guaranteed returns are not legitimate business practices, and any platform that makes it difficult to withdraw a small test amount should be avoided entirely.

Recommended Actions for Victims of Binary Options Fraud

Individuals who have lost money to Tradorax or similar binary options platforms should report the matter to Action Fraud in the United Kingdom or to their local fraud reporting agency in other countries, as reporting provides law enforcement with valuable intelligence that can support investigations and potentially prevent future victims. Individuals should also contact their bank or credit card company to inquire about possible chargeback claims, though success is not guaranteed for authorized transactions. Victims should be cautious of any company or individual claiming they can recover lost funds for an upfront fee, as these recovery rooms are often operated by the same criminals or by other scammers targeting individuals who have already been victimized once.

Final Assessment of Tradorax and Lessons for Future Investors

Tradorax was a binary options platform that ceased operations in September 2017 amid multiple allegations of fraud from investors, many of whom were pensioners who had invested significant portions of their retirement savings. The platform operated outside the regulatory oversight of the Financial Conduct Authority, leaving its customers with no formal protection or recourse when withdrawal requests were denied and accounts were frozen. The case of Tradorax illustrates the broader problem of binary options fraud in the United Kingdom and elsewhere, and while the regulatory gap that allowed such platforms to operate has since been addressed in some jurisdictions, similar schemes continue to target investors using different technologies and business models, so investors should remain cautious of any online trading platform that is not regulated by a recognized financial authority in their home country.

Written by

Barney Stinson

Updated

41 seconds ago