Breaking News

Digital options under scrutiny by regulators

by Staff Reporter
12 March 2019 | 473 Views
Pexels photo
Digital options is highly attractive because of perceived simplicity. You just have to predict whether the value of an underlying asset will increase or decrease. This is similar to traditional forms of investing; however, you have less time to make a prediction. For instance, there is a 30-second 'turbo' option.

Traditional investment options are tightly regulated. For instance, brokers have to tell you that there is a chance of loss. Plus, they need to have funds available to protect the investments of their customers in case they go bust. On the other hand, a significant portion of the digital options industry put morals and ethics on the side. Some platforms are heavily marketed as win-win. Affiliates are paid huge sums per customer registration.

When money is involved, rules can get thrown out. Scammers took advantage of the industry to set up fake websites, collect deposits and then disappear. This leaves thousands of customers out of pocket and reduces trust in the industry.

Digital options is legal in the United States; however, it is tightly regulated. Brokers need to meet a list of requirements, some of which are:

- Need to be based in the US and receive approval to solicit American customers
- Brokers can't profit because a customer lost
- Customers must be able to withdraw their funds at any time via wire or ACH

Some brokerages intentionally go against all of these core rules. As a result, they have had to move their operations overseas to countries such as Cyprus and the Bahamas. Unfortunately, most customers don't do their due diligence before signing up. The promise of huge profits and a millionaire lifestyle can be alluring when huge returns are suggested.

Sadly, 'influencers' and celebrities were keen to promote brokers without also doing their due diligence. The fact is that, on average, more than 80% of digital options traders fail to make a return. Reputable brokers display their percentage on the homepages of their websites.

The perceived ease of digital options means that it attracts people who don't know how the markets work. With minimum deposits as low as $10 and bonuses for first time users, some don't bother to learn. This is rather unfortunate because there is some excellent help available.

Digital options has been likened to gambling because the cost of entry is low; however, investors can be left chasing their losses. The potential for huge returns leaves customers investing more money. This is similar to a gambling addiction. Addicts yearn for the rush of a win. Arguably, some options brokers borrow similar graphical elements and marketing strategies as gambling sites.

When investing in shares, one has the time to research a company and perform fundamental analysis before making a purchase decision. On the other hand, in digital options, the most profitable trades provide 30 seconds to make a decision. Experienced digital options traders focus on a few derivatives, and are therefore able to make better data-backed decisions.




Interestingly, cryptocurrency grew in popularity at a similar time to that of digital options. Fraudsters soon spotted an opportunity. They set up digital options platforms which only accept cryptocurrency. This way they could remain relatively anonymous and steal millions of dollars of cryptocurrency.

When one considers the low-interest rates provided on 'safe' investments and the economic uncertainty, it is little wonder that people are so attracted. I still think that people can make significant returns from options, but they must be armed with the right knowledge and tactics.

The European Securities and Markets Authority (ESMA) has moved to ban digital options in the EU. They believe that there is a high risk of investors losing money through digital options. However, there are other high-risk investments and activities which are still active.

Like in any industry there are those who play by the rules, and there are those using fraudulent tactics. I think governments should be focused on educating the public on how to carry out due diligence online. There are fraudulent forms of every business venture online.

Israeli based firm, Yukom had a case opened against them by the FBI due to alleged underhand tactics. It is alleged that their customer service reps pressured customers into making large deposits. This is because they received a commission for every deposit. Apparently, they also broke every rule in the book when it comes to operating a brokerage.

As previously insinuated, regulating the digital options market and putting blanket bans won't do much. Fraudulent platforms can hope from one domain to the other or move to the dark web. There are legitimate digital options platforms. Here are some signs that you have found a legitimate platform:

- They state the percentage of losing investors on their homepage
- You are reminded that losses are possible and common
- They offer a practice trading platform
- The territories they can operate in is clearly shown on one of their pages
- There are several ways to withdraw money

Generally speaking, if a broker allows you to make deposits using cryptocurrency, they are more likely to be fraudulent. This is because it enables them to operate anonymously. If your cryptocurrency gets stolen, you have little legal recourse. This is because they aren't recognised as money or a store of wealth in most countries around the world.

To conclude, the digital options industry has some fraudulent operators. However, I challenge you to name one industry which doesn't have people using illegal tactics. The key is to make sure that the general public knows how to spot illegal websites. Moreover, like with any investment product, knowledge is wealth. Go into digital options without the proper research and you are likely to make huge losses.


Digital options Cyprus Bahamas

Source: Byo24News

Comments

Latest News

Rocks from mountain crush huts in Zimbabwe

by City Press | 24 March 2019 | 2446 Views

'Tax reforms to rescue debt-distressed Zimbabwe'

by Staff reporter | 24 March 2019 | 695 Views

Afreximbank grants Zimbabwe interbank forex trade loan

by Staff reporter | 24 March 2019 | 781 Views

Zimbabwe volcano fears - The Civil Protection Department (CPD) in Masv...

by Staff reporter | 24 March 2019 | 3013 Views

Mnangagwa goes Biblical: 'Zimbabwe accepts will of God'

by Staff reporter | 24 March 2019 | 1083 Views

Open letter to President Mnangagwa

by Viniel Deredza | 24 March 2019 | 913 Views

Warriors ease into Afcon finals

by SuperSport | 24 March 2019 | 583 Views

Rights Commission finalising probe into Zimbabwe army crackdown - THE ...

by Staff reporter | 24 March 2019 | 164 Views

3 lawyers banned from practising - THREE lawyers have been banned from...

by Staff reporter | 24 March 2019 | 627 Views

Jabulani Sibanda to bounce back?

by Staff reporter | 24 March 2019 | 991 Views

Questions over Mnangagwa's choice of advisors - ON three occasions, Pr...

by Staff reporter | 24 March 2019 | 258 Views

Potraz board okays tariff increases

by Staff reporter | 24 March 2019 | 232 Views

Horror Cyclone destruction trail unravels - THE human toll of Cyclone ...

by Staff reporter | 24 March 2019 | 144 Views

LIVE: Zimbabwe vs Congo Brazzaville

by Staff reporter | 24 March 2019 | 3524 Views

Zimbabwe debt should be audited - ZIMBABWE should not rush to pay its ...

by John Kachembere | 24 March 2019 | 821 Views

Zimbabwean couple hijacked in Durban, wife missing since Monday - A Zi...

by Staff reporter | 24 March 2019 | 3760 Views

Mnangagwa's days numbered

by Staff repo | 24 March 2019 | 8103 Views

Zimbabwean man dies during sex with SA mistress - A  67- year-old...

by Staff reporter | 24 March 2019 | 3654 Views

Zimbabwean company donates laptops to needy SA varsity students - Zoro...

by African News Agency (ANA) | 24 March 2019 | 1043 Views

Gweru prophet sets up school of spiritual gifts - Gweru-born Prophet G...

by Staff reporter | 24 March 2019 | 491 Views

Potraz brings toll free platforms to rural folk

by Staff reporter | 24 March 2019 | 165 Views

Mnangagwa pledges support for Gukurahundi victims

by Staff reporter | 24 March 2019 | 418 Views

Zimbabwe banks must support the interbank trading - THE interbank mark...

by Andrew Lampard | 24 March 2019 | 264 Views

Robbing the poor in the name of patriotism - The post-Robert Mugabe ad...

by Tawanda Majoni | 24 March 2019 | 224 Views

'Using Air Zimbabwe will pose logistical problems for Mnangagwa' - Dep...

by Staff reporter | 24 March 2019 | 422 Views

Entertainment

Andy Muridzo promises new album

by Simbarashe Sithole | 18 March 2019 | 308 Views

Kwejani band is back! - AFTER an eight-year hiatus, Victoria Falls' su...

by Staff reporter | 13 March 2019 | 1189 Views

Moyo revives Pantsula genre

by Staff reporter | 10 March 2019 | 465 Views

Majaivana's sad farewell

by Bruce Ndlovu | 10 March 2019 | 6757 Views

Nceku shifts base to SA

by Staff reporter | 09 March 2019 | 827 Views

Baba Harare abandoned by band members - Jit musician, Baba Harare has ...

by Staff reporter | 04 March 2019 | 2050 Views

Winky D pays the price

by Staff reporter | 03 March 2019 | 5517 Views
iBlog

Apple Watch Teardown Reveals Unique Hardware And Replaceable Parts

The apple watch may not be fine jewelry, but bill detwiler cracks it open and shows you why he thinks it's a fine piece of tech. the apple watch may be beautiful on the outside, but how about on the inside? in this cracking open installment, we go in... Read More
Sergey 11 June 2015 ago

Mobile Spy Software Maker Mspy Hacked

mspy, the makers of a software-as-a-service product that claims to help more than two million people spy on the mobile devices of their kids and partners, to have been massively hacked. a public relations pitch from mspy to krebsonsecurity in march ... Read More
SecNews 17 May 2015 ago