The Commodity Futures Trading Commission (CFTC) has filed a motion for default judgment against a number of entities and individuals involved in a large-scale binary options scheme.

The document, seen by FX News Group, was submitted at the Illinois Northern District Court on January 17, 2025.

The regulator pushed for heavy penalties against Yukom Communications Ltd, Linkopia Mauritius Ltd., Wirestech Limited, WSB Investment Limited, Zolarex Ltd.; and Yossi Herzog, Lee Elbaz, and Shalom Peretz.

The Commission filed its five-count Complaint on August 12, 2019, charging the five Yukom Entities and four individual defendants with, beginning on or around March 26, 2014, and continuing until at least the filing of the Complaint, operating the “Yukom Enterprise” and fraudulently soliciting individuals throughout the United States and other countries to enter into illegal, off-exchange transactions in binary options through fictitious entities using the trade names “BigOption,” “BinaryBook,” and “BinaryOnline” in violation of Sections 2(e), 4c(b), 4d(a)(1), and 6(c)(1) of the Commodity Exchange Act, 7 U.S.C. §§ 2(e), 6c(b), 6d(a)(1), 9(1), and Commission Regulations 32.2, 32.4, 180.1(a)(1)-(3), 17 C.F.R. §§ 32.2, 32.4, 180.1(a)(1)-(3)(2024).

Defaulted Defendant Lee Elbaz is an Israeli citizen who, prior to September 2017, resided in Israel and was the Chief Executive Officer of Yukom. On August 7, 2019, Elbaz was convicted of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349 and three counts of wire fraud in violation of 18 U.S.C. § 1343.

The criminal court ordered Elbaz to pay restitution of $28 million, out of $140 million of total loss, based on the evidence at trial regarding the losses attributable to Elbaz by victims of the binary options fraud from May 2014 to June 2017 who invested under the brand names BinaryBook or BigOption where such losses were attributable to the charged conspiracy and reasonably foreseeable to Elbaz.

Elbaz is currently incarcerated at Hazelton FCI in Bruceton Mills, West Virginia and is scheduled to be released on April 28, 2037.

Defaulted Defendant Yossi Herzog, also known as Yosef Herzog, is an Israeli citizen who, during the Relevant Period, resided in Zichron Israel and owned, operated, and controlled each entity comprising the Yukom Enterprise. Herzog has been charged with one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349 and three counts of wire fraud in violation of 18 U.S.C. § 1343 in connection with the same acts and practices set forth in the Complaint.

As of January 13, 2025, the public docket in that matter indicates that Herzog has yet to appear and answer those charges.

Defaulted Defendant Shalom Peretz is an Israeli citizen who, during the Relevant Period, had an ownership interest in Wirestech, WSB and Zolarex and was the director, officer and beneficial owner of Zolarex and the director of Wirestech.

Defaulted Defendant Yukom Communications Ltd. was incorporated in Israel in or prior to 2013 and maintained an office in Casarea, Israel. It does not appear to have an active legal status.

Defaulted Defendant Linkopia Mauritius Ltd. was incorporated in Mauritius in or prior to 2014 and maintained offices in Ebene, Mauritius. According to the Mauritius Network Services – Corporate and Business Registration Department website Linkopia is now a defunct entity.

Defaulted Defendant Wirestech Limited was incorporated in the Republic of the Marshall Islands on or around August 24, 2015 and did business as BigOption. According to International Registries, the corporate registry for the Republic of the Marshall Islands, it is no longer an active entity.

Defaulted Defendant WSB Investment Limited was incorporated in Anguilla on or around March 27, 2014; in the United Kingdom on or around May 30, 2014; in St. Vincent and the Grenadines on or around February 9, 2015; and in Gibraltar prior to September 10, 2016 and did business as BinaryBook. According to corporate registries in Anguilla and the Untied Kingdom, WSB is no longer active and does not appear to be active in St. Vincent and the Grenadines or Gibraltar either.

Defaulted Defendant Zolarex Ltd. was incorporated in the Republic of the Marshall Islands on or around September 10, 2015 and did business as BinaryOnline. It is no longer an active entity.

According to the motion for default judgment, the Commission requests that the Court require the Defaulted Defendants to joint and severally pay restitution in the amount of $112,918,458, to be offset by any amounts paid to each victim in the criminal matter.

The CFTC also pushes for a civil monetary penalty of triple the gain Defendants reaped from the fraud, $338,755,374.

The Commission also requests that the Court enter an injunction against the Defaulted Defendants permanently restraining, enjoining and prohibiting Defaulted Defendants from directly or indirectly violating the provisions of the Act and Regulations with which they are charged in the Complaint and:

• Trading on or subject to the rules of any registered entity (as that term is defined by Section la(40) of the Act, 7 U.S.C. § la(4);
• Entering into any transactions involving “commodity interests” (as that term is defined in Regulation 1.3, 17 C.F.R. § 1.3 (2024) for accounts held in their names or for accounts in which they have a direct or indirect interest;
• Having any commodity interests traded on their behalf;
• Controlling or directing the trading for or on behalf of any other person or entity, whether by power of attorney or otherwise, in any account involving commodity interests;
• Soliciting, receiving, or accepting any funds from any person for the purpose of purchasing or selling any commodity interests;
• Applying for registration or claiming exemption from registration with the CFTC in any capacity, and engaging in any activity requiring such registration or exemption from egistration with the CFTC, except as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2024); and
• Acting as a principal (as that term is defined in Regulation 3.1(a), 17 C.F.R. § 3.1(a) (2024), agent, or any other officer or employee of any person registered, exempted from registration, or required to be registered with the CFTC, except as provided for in 17 C.F.R. § 4.14(a)(9).