SpotOption

A summary of what happened?

SpotOption was a prominent technology provider in the binary options industry, offering trading platforms to numerous brokers worldwide. Despite its significant market presence, the company faced substantial criticism and allegations concerning its business practices.

Major Concerns and Allegations Against SpotOption:

1. Association with Fraudulent Brokers:
   • SpotOption supplied its trading platform to various brokers, some of which were accused of fraudulent activities. Notably, Banc de Binary, once SpotOption’s largest client, shut down in January 2017 after facing fines and operational prohibitions in multiple countries.
     Wikipedia
2. Facilitation of Scams:
   • Critics alleged that SpotOption’s technology enabled brokers to manipulate trading outcomes, leading to significant financial losses for traders. Discussions on forums like Forex Peace Army highlighted concerns about SpotOption’s role in facilitating scams.
     Forex Peace Army
3. Regulatory Scrutiny:
   • The company’s operations attracted attention from regulatory bodies due to its association with brokers involved in illicit activities. In June 2021, evidence was presented in a civil case in Tel Aviv District Court alleging that a SpotOption insider revealed a fraudulent binary options scheme.
     Wikipedia
4. Lack of Transparency:
   • SpotOption faced criticism for not adequately vetting the brokers using its platform, leading to a proliferation of fraudulent entities in the binary options market. This lack of oversight raised questions about the company’s commitment to ethical business practices.

These concerns contributed to a tarnished reputation for SpotOption, highlighting the need for greater transparency and regulatory oversight in the financial technology sector.

Analyzing the Fake Copyright Notice(s)

Our team collects and analyses fraudulent copyright takedown requests, legal complaints, and other efforts to remove critical information from the internet. Through our investigative reporting, we examine the prevalence and operation of an organized censorship industry, predominantly funded by criminal entities, oligarchs, and disreputable businesses or individuals. Our findings allow internet users to gain insight into these censorship schemes’ sources, methods, and underlying objectives.

What was SpotOption trying to hide?

SpotOption‘s attempts to hide unfavourable content through the misuse of copyright notices while allegedly engaging in perjury present serious legal concerns. These actions suggest a calculated attempt to manipulate legal systems to suppress free speech, a fundamental violation of copyright law principles and an abuse of legal processes. The use of such tactics not only undermines the integrity of copyright protection but also potentially constitutes perjury, further entangling SpotOption in legal accountability. Let’s examine the information SpotOption may be trying to remove from the internet –

Investigative Report: SpotOption – Allegations, Controversies, and the Collapse of a Binary Options Powerhouse

Introduction

SpotOption, once a leading technology provider in the binary options industry, supplied trading platforms to brokers worldwide. Founded in 2010 and headquartered in Israel, SpotOption quickly grew to dominate the market, powering numerous brokers who operated globally. However, the company became embroiled in controversies that ultimately tarnished its reputation and contributed to the collapse of the binary options industry. Allegations of enabling fraud, facilitating scams, and regulatory violations plagued the company until its eventual closure. This investigative report examines the detailed history of allegations, lawsuits, and regulatory actions against SpotOption.

1. Background on SpotOption’s Operations

1.1. Role in the Binary Options Industry

• SpotOption provided white-label trading platforms to brokers, enabling them to operate binary options trading services. These platforms offered features such as automated trading, high-frequency trading, and customer management tools.
• The company marketed its technology as a “turnkey solution,” allowing brokers to set up operations quickly and efficiently.

1.2. Business Model

• SpotOption charged brokers licensing fees and earned commissions on trades executed through its platform.
• The company’s revenue model depended on the volume of trades, incentivizing aggressive trading activity.

2. Allegations Against SpotOption

2.1. Enabling Fraudulent Brokers

• SpotOption was accused of providing platforms to brokers that engaged in fraudulent practices. Many of these brokers used deceptive marketing tactics to attract clients, promising high returns on investments.
• A notable example was Banc de Binary, SpotOption’s largest client, which was shut down in 2017 after facing fines and regulatory bans in multiple countries, including the U.S. and U.K.
• SpotOption allegedly failed to vet brokers using its platform, allowing them to operate unchecked and perpetrate scams against unsuspecting traders.

2.2. Facilitation of Scams

SpotOption’s trading platform itself became a point of contention. Critics and former insiders accused the company of enabling brokers to manipulate trading outcomes in ways that disadvantaged traders:

• Manipulated Trades: Brokers allegedly used back-end access provided by SpotOption to alter trading outcomes, ensuring that customers lost their investments.
• Misleading Features: The platform reportedly included features that made it appear as though trades were legitimate, while in reality, brokers retained significant control over the results.
• Aggressive Marketing: Brokers using SpotOption’s platform often employed unethical sales tactics, including cold-calling and false guarantees of profitability, to lure traders.

2.3. Regulatory Scrutiny

SpotOption and its affiliates faced significant regulatory attention globally, with allegations of violating financial laws and enabling unregulated trading:

• United States:
  • The U.S. Securities and Exchange Commission (SEC) pursued legal action against brokers powered by SpotOption, such as Banc de Binary, for unregistered operations and fraud.
  • SpotOption itself was indirectly implicated due to its platform’s central role in facilitating these brokers’ operations.
• European Union:
  • Regulatory authorities in Europe, including the Cyprus Securities and Exchange Commission (CySEC), cracked down on binary options brokers for non-compliance with licensing and transparency requirements. Many of these brokers relied on SpotOption’s technology.
• Israel:
  • In 2017, the Israeli government banned the binary options industry altogether, citing widespread fraud. SpotOption, headquartered in Israel, ceased operations soon after.

2.4. Lawsuits and Insider Revelations

• Civil Case in Tel Aviv District Court (2021):
  • A former SpotOption insider alleged in court that the company knowingly supported fraudulent binary options schemes. The whistleblower provided evidence suggesting that SpotOption executives were aware of these practices but prioritized profits over ethical concerns.
• Class-Action Lawsuits:
  • Victims of binary options fraud filed lawsuits against brokers and their technology providers, including SpotOption. These lawsuits claimed that SpotOption’s platform was instrumental in perpetuating scams.

3. Public Complaints and Negative Reviews

3.1. Widespread Financial Losses

• Traders who used brokers powered by SpotOption frequently reported losing their investments, often due to unfair practices enabled by the platform.
• Many victims recounted stories of being pressured into depositing more funds, only to lose their money due to manipulated trades.

3.2. Lack of Accountability

• Customers criticized SpotOption for its lack of transparency and failure to address complaints against brokers using its platform.
• The company’s business model, which prioritized broker profits over trader welfare, was seen as inherently exploitative.

4. Regulatory Actions and Industry Collapse

4.1. Global Crackdown on Binary Options

• The widespread fraud associated with binary options led to a global crackdown by regulators:
  • 2017 Ban in Israel: The Israeli government banned binary options trading entirely, citing its role as a fraudulent industry that exploited traders worldwide.
  • European Union Restrictions: ESMA imposed strict restrictions on binary options trading, effectively curbing the industry’s growth in Europe.

4.2. Closure of SpotOption

• SpotOption ceased operations following the collapse of the binary options industry and mounting legal pressures. By 2018, the company’s website was taken offline, and its leadership faced ongoing legal scrutiny.

5. Broader Implications and Lessons

5.1. Impact on Victims

• Thousands of traders worldwide lost millions of dollars due to brokers powered by SpotOption. Many victims were retail investors with limited financial literacy, making them particularly vulnerable to deceptive tactics.

5.2. Lessons for the Fintech Industry

• The SpotOption case highlights the need for greater oversight of technology providers in the financial sector. Platforms that enable trading must be held accountable for how their tools are used.

5.3. Regulatory Evolution

• SpotOption’s controversies prompted regulators to strengthen compliance requirements for trading platforms and brokers, emphasizing transparency and investor protection.

Conclusion

SpotOption’s rise and fall exemplify the dangers of unchecked growth in high-risk financial industries. While the company played a pivotal role in popularizing binary options trading, its failure to enforce ethical practices and vet its clients ultimately contributed to widespread fraud and financial harm. Allegations of enabling manipulated trades, facilitating scams, and prioritizing profits over transparency have left a lasting stain on its legacy.

The collapse of SpotOption serves as a cautionary tale for the financial technology sector, underscoring the importance of accountability, regulatory compliance, and ethical business practices in maintaining trust and safeguarding investors.

How do we counteract this malpractice?

Once we ascertain the involvement of SpotOption (or actors working on behalf of SpotOption), we will inform SpotOption of our findings via Electronic Mail.

Our preliminary assessment suggests that SpotOption may have engaged a third-party reputation management agency or expert, which, either independently or under direct authorization from SpotOption, initiated efforts to remove adverse online content, including potentially fraudulent DMCA takedown requests. We will extend an opportunity to SpotOption to provide details regarding their communications with the agency or expert, as well as the identification of the individual(s) responsible for executing these false DMCA notices.

Failure to respond in a timely manner will necessitate a reassessment of our initial assumptions. In such an event, we will be compelled to take appropriate legal action to rectify the unlawful conduct and take the following steps –

Since SpotOption made such efforts to hide something online, it seems fit to ensure that this article and sensitive information targeted online by these events get a lot more exposure and traffic than what it would have received originally

We hope this becomes an excellent case study for the Streisand effect…The key idea behind the Streisand effect is that efforts to restrict information can backfire, often causing the information to gain more attention than it would have otherwise. This effect is widespread in the digital age, where users quickly notice and spread censorship efforts on social media and other platforms. Trying to suppress something can unintentionally lead to it becoming more visible, which SpotOption is finding out the hard way.

Potential Consequences for SpotOption

Under Florida Statute 831.01, the crime of Forgery is committed when a person falsifies, alters, counterfeits, or forges a document that carries “legal efficacy” with the intent to injure or defraud another person or entity.

Forging a document is considered a white-collar crime. It involves altering, changing, or modifying a document to deceive another person. It can also include passing along copies of documents that are known to be false. In many states in the US, falsifying a document is a crime punishable as a felony.

Additionally, under most laws, “fraud on the court” is where “a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system’s ability impartially to adjudicate a matter by improperly influencing the trier of fact or unfairly hampering the presentation of the opposing party’s claim or defense.”  Cox v. Burke, 706 So. 2d 43, 46 (Fla. 5th DCA 1998) (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989)).

Is SpotOption Committing a Cyber Crime?

Yes, it seems so. SpotOption used multiple approaches to remove unwanted material from review sites and Google’s search results. Thanks to protections allowing freedom of speech in the United States, there are very few legal ways to do this. SpotOption could not eliminate negative reviews or search results that linked to them without a valid claim of defamation, copyright infringement, or some other clear breach of the law.

Faced with these limitations, some companies like SpotOption have gone to extreme lengths to fraudulently claim copyright ownership over a negative review in the hopes of taking it down.

Fake DMCA notices have targeted articles highlighting the criminal activity of prominent people to hide their illegal behavior. These people, which include US, Russian, and Khazakstani politicians as well as members from elite circles including the mafia and those with massive financial power, are all connected – and alleged corruption ranging from child abuse to sexual harassment is exposed when exploring evidence found at these URLs. It appears there’s a disturbing level of influence being exerted here that needs further investigation before justice can be served. SpotOption is certainly keeping interesting company here….

The DMCA takedown process requires that copyright owners submit a takedown notice to an ISP identifying the allegedly infringing content and declaring, under penalty of perjury, that they have a good faith belief that the content is infringing. The ISP must then promptly remove or disable access to the content. The alleged infringer can then submit a counter-notice, and if the copyright owner does not take legal action within 10 to 14 days, the ISP can restore the content.

Since these platforms are predominantly based in the U.S., the complaints are typically made under the Digital Millennium Copyright Act (DMCA), which requires online service providers and platforms to react immediately to reports or violations. Big Tech companies rarely have systems in place to assess the merit of each report. Instead, all bad actors need to do is clone a story, backdate it, and then demand the real thing be taken down.

Reputation Agency's Modus Operandi

The fake DMCA notices we found always use the “back-dated article” technique. With this technique, the wrongful notice sender (or copier) creates a copy of a “true original” article and back-dates it, creating a “fake original” article (a copy of the true original) that, at first glance, appears to have been published before the true original.

Then, based on the claim that this backdated article is the “original,” the scammers send a DMCA to the relevant online service providers (e.g. Google), alleging that the ‘true’ original is the copied or “infringing” article and that the copied article is the “original,” requesting the takedown of the ‘true’ original article. After sending the DMCA request, the person who sent the wrong notice takes down the fake original URL, likely to make sure that the article doesn’t stay online in any way. If the takedown notice is successful, the disappearance from the internet of information is most likely to be legitimate speech.

As an integral part of this scheme, the ‘reputation management’ company hired by SpotOption creates a website that purports to be a ‘news’ site. This site is designed to look legitimate at a glance, but any degree of scrutiny reveals it as the charade it is.

The company copies the ‘negative’ content and posts it “on the fake ‘news’ site, attributing it to a separate author,” then gives it “a false publication date on the ‘news’ website that predated the original publication.

The reputation company then sent Google a Digital Millennium Copyright Act notice claiming the original website infringed copyright. After a cursory examination of the fake news site, Google frequently accepts the notice and delists the content.

In committing numerous offences, SpotOption either premeditated actions or were unaware of the consequences. Despite hiring an agency to make Google disregard any negative information about SpotOption, ignorance does not excuse this wrongdoing.

Fake DMCA notices have targeted articles highlighting the criminal activity of prominent people to hide their illegal behavior. These people, which include US, Russian, and Khazakstani politicians as well as members from elite circles including the mafia and those with massive financial power, are all connected – and alleged corruption ranging from child abuse to sexual harassment is exposed when exploring evidence found at these URLs. It appears there’s a disturbing level of influence being exerted here that needs further investigation before justice can be served. FSMSmart is certainly keeping interesting company here.

The Reputation Laundering

Rogue Reputation agencies use spurious copyright claims and fake legal notices to remove and obscure articles linking clients to allegations of tax avoidance, corruption, and drug trafficking. Most of these reputation agencies are based offshore, mainly in Russia, India, and Eastern Europe, and they do not worry about complying with US-based laws.

The content in all of the articles for which the fraudulent DMCA notices have been sent relates to allegations of criminal allegations, including corruption, child abuse, sexual harassment, human trafficking and financial fraud against businesses and individuals with ultra-high net worth.

In addition to the misuse of the DMCA takedown process, there is a notable absence of enforcement concerning perjury violations. The statutory requirement related to perjury is designed to deter copyright holders from submitting fraudulent or knowingly false takedown requests, as they may face legal consequences for making false declarations under penalty of perjury. However, to date, there have been no known instances of any individual being prosecuted for perjury in connection with the submission of false DMCA takedown notices.

This lack of enforcement has emboldened copyright holders to exploit the DMCA takedown process to suppress dissent, criticism, or other unfavorable content, without fear of legal repercussions.

Some of the people and businesses who have employed this tactic to remove legitimate content from Google illegally include a Spanish businessman-turned-cocaine-trafficker, Organised crime, an Israeli-Argentine banker accused of laundering money for Hugo Chávez’s regime, a French “responsible” mining company accused of tax evasion, child molesters and sexual predators. SpotOption is in great company ….

What else is SpotOption hiding?

We encourage you to ‘Dork‘ Google by searching for keyword combinations such as [SpotOption] + {Negative Keyword, such as Scam, Fraud, Complaints, Lawsuit, Sanction, etc} on Google. It’s likely if you scroll down to the bottom of this Google search results, you’ll stumble upon this Legal Takedown notice (pictured below)

To make such an investigation possible, we encourage more online service providers to come forward and share copies of content removal requests with industry experts and researchers. If you have any information on SpotOption that you want to share with experts and journalists, kindly email the author directly at [email protected].

All communications are strictly confidential and safeguarded under a comprehensive Whistleblower Policy, ensuring full protection and anonymity for individuals who provide information.