Operator of SpotFN and Binary FN faces up to 20 years in prison
The Department of Justice (DOJ) announced on Friday the arraignment of David Butler, a United States citizen on an Indictment charging him with Conspiracy to Commit Wire Fraud in connection with a scheme to defraud investors in binary options.
Butler was arrested in April 2022 in Costa Rica and extradited to the United States on July 14, 2022.
As alleged in court filings, between approximately January 2011 and October 2016, Butler and his co-conspirators operated binary options companies, including SpotFN, Binary FN and Janus Options from Glen Cove, New York, Costa Rica and Kosovo.
The binary options companies promised to pay investors, who were located throughout the United States, a predetermined profit based upon particular outcomes in the markets for securities, currencies and other investments.
To induce investments, Butler and his co-conspirators allegedly told binary options investors, in telephone calls and emails, that the predetermined profits that the binary options companies had promised them in connection with the investors’ purchases of binary options would be based upon the actual prices of securities, currencies and other investments at particular points in time.
Unbeknownst to the investors, however, Butler and his co-conspirators used a computer software that allowed the binary options companies to manipulate data associated with the investors’ binary options so that the probability of investors earning a profit would favor the binary options companies. At no time did Butler or any other employee of the binary options companies inform the investors that the binary options that they had purchased from the binary options companies could be manipulated to the investors’ disadvantage.
As a result of their deception, Butler and his co-conspirators allegedly stole more than $5 million from binary options investors.
If convicted, Butler faces up to 20 years in prison.