A $451 Million Judgment—& the Compliance Lessons You Can’t Ignore

Key Takeaways:

• $451M Judgment & Trading Ban: The U.S. District Court for the Northern District of Illinois issued a $451 million judgment against offshore entities and individuals behind a massive binary options fraud, permanently banning them from U.S. markets.
• Widespread Fraud & Platform Manipulation: The scam, operating through websites like BigOption and BinaryBook, lured U.S. investors with promises of easy profits while rigging trades, blocking withdrawals, and misleading customers.
• International Network of Perpetrators: The scheme was run by Israeli nationals and offshore companies from Mauritius, Anguilla, Gibraltar, and the Marshall Islands, exploiting weak regulatory oversight.
• Criminal Convictions & Prison Sentences: Key figures, including Lee Elbaz, received lengthy prison terms (20 years) and hefty restitution orders, reinforcing U.S. authorities' crackdown on financial fraud.
• Compliance & Risk Lessons: The case underscores third-party risk, transparency, and real-time monitoring as critical safeguards against fraud, emphasizing the need for global compliance vigilance in financial operations.

Full Article

The U.S. District Court for the Northern District of Illinois has handed down a default judgment against a network of offshore entities and individuals behind a massive binary options fraud scheme. The total financial penalty reaches a staggering $451 million in restitution and civil penalties. And for those involved? It’s a permanent ban from future trading in U.S. markets.

This case—spanning years and continents—targeted U.S. residents with promises of easy, profitable trades through websites like BigOption, BinaryBook, and BinaryOnline. But the truth was far less glamorous. Rather than delivering the lucrative opportunities they touted, the defendants systematically rigged their platforms to ensure that the vast majority of users lost their money. And when customers tried to withdraw their funds or question what was happening, they faced further deceit and obfuscation.

The defendants involved? A mix of foreign companies and Israeli nationals, including:

• Yukom Communications Ltd. (Israel)
• Linkopia Mauritius Ltd. (Mauritius)
• Wirestech Limited d/b/a BigOption (Marshall Islands)
• WSB Investments Ltd. d/b/a BinaryBook (Anguilla, UK, St. Vincent and the Grenadines, Gibraltar)
• Zolarex Ltd. d/b/a BinaryOnline (Marshall Islands)
• Yossi Herzog, Lee Elbaz, and Shalom Peretz (Israeli citizens)

The court found that these entities and individuals were responsible for years of fraud, all perpetrated under the guise of legitimate trading platforms. They misled customers into believing that their investments would yield high returns. But behind the slick websites and convincing pitches, they were playing a different game—one in which the only winners were the fraudsters themselves.

In its ruling, the court didn’t just slap the defendants with financial penalties. It also handed down permanent injunctions, barring them from participating in any future trading in CFTC-regulated markets. This is a significant consequence, especially for those hoping to continue operating in the financial space, even under different names or structures.

The CFTC first filed the complaint against these individuals in 2019, following an investigation that uncovered the scope of the fraudulent activity. For over five years, from March 2014 until the complaint was filed, the defendants exploited unsuspecting investors. They used emails, phone calls, and misleading online ads to lure people into making binary options trades. But rather than delivering on their promises, the traders were losing money, and the perpetrators manipulated the platform’s settings to ensure no one could win. To top it off, they kept customers’ funds and misled them about the withdrawal process, making it nearly impossible for them to access their own money.

But this case isn’t just about a large sum of money. It’s also about the broader impact of fraudulent schemes like this. As the CFTC continues to battle global scams, this judgment sends a strong message to fraudsters everywhere: U.S. regulators will not back down, and they have the tools to bring you to justice, no matter where you are.

The case also comes with some criminal consequences. Lee Elbaz, one of the key individuals behind the scam, was convicted in 2019 of wire fraud and conspiracy and sentenced to 20 years in prison. She’s also been ordered to pay restitution of $28 million. Meanwhile, Yakov Cohen, another defendant, pled guilty to conspiracy charges and was sentenced to 5.5 years in prison in 2024. He, too, is facing restitution orders.

In the end, the financial penalty and the legal outcomes here paint a picture of how seriously U.S. authorities are taking these types of fraudulent schemes. While these defendants may have thought they could get away with defrauding people from around the world, this case shows that they were wrong.

The Fraud in Action: A Digital Wild West

But let’s talk about what this means for you—the compliance professional who’s watching this unfold. This case isn’t just about catching bad guys; it’s a glaring example of what can go wrong when systemic gaps in compliance, risk management, and due diligence allow fraud to flourish.

The fraud operation wasn’t a one-off scam. It was a well-oiled machine, running for years with sophisticated tactics that manipulated customers, withheld their funds, and blocked them from withdrawing winnings. The defendants—Yukom Communications Ltd., Wirestech Limited, and others—used slick websites and emails to promise a “get-rich-quick” fantasy that played on their customers’ hopes and dreams. The result? A massive betrayal of trust that left investors high and dry.

For compliance teams, this isn’t just a case of rogue actors breaking the rules. It’s also about systematic vulnerabilities that allowed this fraud to happen—and continue for so long. Let’s break this down:

1. Don’t Overlook the Third-Party Risk: The offshore nature of this scam is a classic example of how easy it is for bad actors to slip through the cracks when companies fail to vet their third-party vendors. Many of these entities were incorporated in jurisdictions with lax regulatory oversight—places like Mauritius, Anguilla, and Gibraltar. For compliance officers, this highlights an urgent need for stronger vetting processes and due diligence, especially when engaging with foreign partners or vendors. This isn’t just about checking a box—it's about deep diving into the regulatory environments where these entities operate.
2. Transparency Isn’t Optional: Fraudsters thrive when information is obscured. These platforms didn’t just mislead their customers with false promises—they actively hindered their ability to withdraw funds, obstructed attempts to understand “bonus” terms, and used deceptive trading practices to prevent users from winning. This is where transparency becomes critical. Clear, honest disclosures and robust consumer protections aren’t just legal obligations—they’re your first line of defense against fraud. Ensure your customers know exactly what they’re getting into—and just as importantly, know how to get out if things go sideways.
3. Leverage Technology for Real-Time Monitoring: Fraud in the digital age doesn’t just happen in a vacuum. It happens on platforms with sophisticated tech behind them, often using algorithms to manipulate outcomes and create false impressions of fairness. For compliance professionals, this points to the need for advanced technology to keep up with bad actors. Transaction monitoring and real-time risk assessments are no longer optional—they’re essential for identifying patterns of fraud before they escalate. Invest in tools that not only track suspicious behavior but also predict and prevent it.
4. The Global Compliance Challenge: This case is a reminder that international compliance isn’t just a nice-to-have—it’s a must. When you’re working with international partners, the rules can vary widely. That’s why compliance teams must stay agile, keeping up with global regulatory shifts and ensuring that their frameworks are scalable across borders. Whether you’re working with a third party in Gibraltar or a partner in Mauritius, your risk management strategies need to be just as global as your business operations.
5. Collaboration Over Competition: We’ve seen time and time again that when regulators and industries collaborate, the fight against fraud becomes more powerful. The CFTC, in this case, worked with law enforcement agencies to build a case that took down these bad actors and protected consumers. As compliance professionals, it’s important to engage with your peers and share insights, tips, and best practices. Collaboration strengthens the entire industry, making it harder for fraudsters to thrive.

For many of us in the compliance space, it’s easy to think of these types of fraud cases as isolated incidents. But the truth is, fraud like this is just one example of a much larger issue of systemic vulnerabilities within the financial ecosystem that can allow bad actors to operate undetected for far too long.

The judgment against these fraudsters is a huge win for justice, but it’s also a wake-up call for compliance teams everywhere. The key takeaway? We must be proactive, not reactive, in identifying risks before they become disasters. This means better oversight, smarter technology, and more rigorous third-party vetting.

In the fast-paced, interconnected world we operate in, compliance professionals can’t afford to sit back and relax. We need to stay ahead of the curve, adapt to evolving threats, and ensure that our businesses are always on the right side of the law. Vigilance, transparency, and collaboration aren’t just buzzwords—they’re the cornerstones of a compliance culture that works.

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