Binary Options are proven to be one of the easiest segments of the financial industry to conduct a scam in. The gambling nature of the process creates gaps in the regulatory framework that fraudsters can use to lie their way into becoming rich. One such occurrence was spotted by the New York federal court, which was in its hearings for the past few days.
The CEO of Blue Bit Banc and Blue Bit Analytics has pleaded guilty for performing fraud on the companies’ binary options platforms. The companies are online trading bands, any other bands you can find elsewhere. However, in this case, they turned out more like traps than kettles of gold. Not only was the CEO involved in defrauding investors out of $2 million with the binary options scheme, but he also tried to cover the tracks by adding another scheme on top of the first one. The other scheme was a crypto related project, that was just used as collateral if the word got out about the first one.
A long time in the making
The accusations actually started way before the CEO pleaded guilty. Back in April of this year, Blake Kantor, also known as Bill Gordon (most likely his stage name) was arrested for multiple fraud charges and false statements to the FBI. According to the US Justice Department’s announcement, Kantor may face 20 years in prison for his dealings in fraud and testimony falsifications.
The scheme is by far not new. According to investigations, it has been going on for about 4 years, starting in at least 2014. The investigations also found that Kantor had falsified his background to appear as a successful investor himself, which is when he used his stage name, Bill Gordon. After concerns about the whole scheme being unearthed Kantor or “Gordon”, convinced some of his investors to convert to a cryptocurrency called ATM Coin. Which, obviously turned out to be completely made up, but the timing of the offer was impeccable as the crypto boom was in full swing. So the investors didn’t think too much about it.
How the scam unfolded
There’s actually a full detailed report from the Justice Department. The report tells us about the scam itself, how it started and how it grew. According to what we found Kantor began the scheme in March 2014, when he established Blue Bit Banc (BBB), with which he was “providing” binary options trading services. However, Kantor was able to alter the platform’s algorithmic settings to a point where the investors were pretty much guaranteed to lose on their trades. This of course only benefited Kantor’s company as it would bet against the customers.
Before the whole cryptocurrency scheme was added to his “portfolio” Kantor had to somehow hide the funds he would gain from his binary options scheme. Therefore he opted for the good old offshore accounts. Using some of his aliases, he was able to open accounts on the island nation of St Kitts and Nevis. This made it very hard to trace the funds directly to him but looks like he still bit off more than he could chew.