TEL AVIV (Reuters) - The owner of an Israeli binary options firm has been arrested on suspicion of fraud and extortion after an investor abroad reported losses of more than $500,000 (£388,144) to the online company, Israeli police said on Tuesday.
Israel already banned the domestic sale of binary options last year, the first country to do so, and is now seeking to extend the ban to firms selling them abroad as well. A draft law is pending parliament approval.
The man from Tel Aviv is suspected of fraud, false registration, threats and extortion, police said in a statement. It gave no further information on the woman who filed the complaint.
The arrest, which police said came after an undercover investigation lasting months, is the first since the authorities announced a crackdown on binary option firms, many of which critics describe as nothing more than high-pressure scams.
A Reuters special report published in September shed light on the rapid rise of the industry in Israel. London-based lawyers said hundreds of their clients were duped out of vast sums of money by some Israeli firms. More than 100 operators are estimated to be based in Israel, a technology hub.
Binary options involve placing a bet on whether the value of a financial asset - a currency, a commodity or a stock - will rise or fall in a fixed time frame, sometimes as short as a minute.
Investors have accused some of these Israeli firms of transferring money between accounts without approval and in some cases of preventing them from withdrawing their own funds.
The head of Israel’s financial regulator said in November he was working with authorities in the United States, Britain, France and Belgium to investigate complaints against Israeli firms selling binary options internationally.
Editing by Raissa Kasolowsky