In a wall-to-wall consensus, the Knesset passed a ban on the binary options industry, which has perpetrated widespread fraud in Israel and abroad, and caused extensive harm to the country’s reputation.
The law, which was passed unanimously on the first day of the Knesset winter session on Monday, will go into effect three months from now. After that time, anyone caught involved in binary options will face punishment of up to two years in jail, The Times of Israel reported on Monday evening.
Last year, binary operations were outlawed within Israel, while overseas business was allowed to continue. Now, all such activities will be illegal.
At its peak, binary options was estimated to bring in $5 billion-$10 billion a year. Hundreds of firms have operated from Israel, employing thousands of Israelis.
Fewer than 20 Israelis have been arrested for binary options fraud, and none has been indicted. In September, the FBI arrested binary options CEO Lee Elbaz, when she arrived at JFK airport, underlining growing efforts by international law enforcement to crack down on the crime.
“We worry about the BDS movement,” said MK Rachel Azaria (Kulanu) in her introduction to the law. “This industry has a huge impact on how Israel is viewed throughout the world. Our government officials go to international conferences and their colleagues abroad raise their eyebrows because of this industry.”
The law that passed on Monday was a modified version of a more comprehensive draft that would have outlawed Israel-based forex and CFD companies as well.
Critics have charged that this creates a loophole that can be exploited by fraudulent binary options companies, which alter their product to circumvent the ban.