We’re all trying to find ways to earn some extra bucks and grow our money. This can sometimes lead us to try different ventures that promise a good return on investment.
However, not all of them are as good as they sound. To make matters worse, some of these money-making opportunities may even be against the law.
If you’ve been reading about online trading to grow your money, you’ve probably heard of binary options. If you haven’t tried this yet, allow us to answer one question that may have been bugging you for quite some time.
Are binary options illegal? Are there laws and regulations that you must follow? Let’s find out.
Issues That Come with Trading Platforms
Before answering that question, let’s first dig deep into what binary options trading platforms often face. As you can imagine, the SEC or Securities and Exchange Commission in the United States regularly receives complaints from customers about various trading platforms.
While the nature of the complaints may vary from one case to another, most of them fall under three general categories.
Failure To Credit Customer
The most common complaint submitted by thousands of people refers to the platform’s failure to credit the customer. These trading platforms often have brokers who consistently encourage traders to deposit more funds into their accounts.
While this may seem innocent at first glance, the problem comes when traders or investors try to withdraw money from their accounts. Some of these brokers and platforms do not grant the customers’ requests to retrieve their money.
That means both the initial investment and the succeeding monetary returns do not get returned to the investor. Instead, the money remains within the platform, broker, and the company.
Identity Theft
Some trading platforms require you to submit your personal information during registration. Some of them would even ask for your credit card or bank account details.
As an investor, you would think that this is all to ensure you are who you say you are. However, a few of these trading platforms use these data for criminal activities.
Other people can easily drain your money in the bank or pretend to be you for malicious transactions. That’s why you have to be mindful of what the platform is asking of you.
Make sure that they don’t ask for your bank details and only require basic information such as your name, email, and country. Legitimate trading platforms, like when you’re using the Finpari login, will not ask for other sensitive information.
Software Manipulation
A lot of investors are unaware that some companies design their own trading platforms. That means there is no real basis for whether a certain asset increases or decreases its value.
Thus, companies can easily manipulate the result of the trading platforms. You may get the chance to earn a few bucks during your first few days or weeks. However, the company still controls the results, which means you’d most probably lose money in the long run.
Why Are Binary Options Trading Platforms Still Around?
With all the complaints and issues we’ve listed above, one cannot help but wonder why these platforms still exist. Why doesn’t the government take them down?
Well, the thing about binary options trading is that it’s quite easy to join and earn money. Hence, numerous people from all over the world invest their money on various platforms.
Since you only have two options, even untrained traders can access and comprehend the system. The get-rich-quick scheme is what attracts investors to test their fortune.
Are Binary Options Illegal?
Then comes the question, are binary options illegal? If an investor is exposed to all sorts of scams and frauds when interacting with these platforms, shouldn’t the government prohibit this type of trading?
That depends. You see, not all companies can manipulate the results of a trading platform. Not all of these companies use your information for identity theft. Finally, not all of them will withhold your money should you try to cash out.
That’s because a few trading platforms have a regulating body, which is the CFTC or Commodity Futures Trading Commissions. The primary task of this government agency is to oversee how these companies design and run their trading platforms. They protect the public and potential investors from fraud, manipulation, and theft.
Should We Avoid Binary Options Trading?
With all the risks involved in binary options trading, should the public avoid it completely? You have to keep in mind that these risks are only present in platforms that do not have a regulatory body.
We can’t say for certain if platforms outside the USA need registration with their own local government. Nonetheless, you shouldn’t worry about trading platforms in the USA as long as they are certified and accredited by the CFTC.
Conclusion
Some companies often prey on our motivation to earn more and grow our money. Thankfully, the US government never fails to provide us with adequate protection from scams.
When it comes to binary options trading, make sure that you know what you’re getting into. Additionally, it’s best to be cautious and research the company. If the CFTC regulates their platforms, then they’re not illegal. You can rest easy knowing that your investment is protected.