An Israeli court ruling last week meant bad news for the peer-to-peer binary options exchange firm Fairtrade, as it will be forced to shut down all business operations after the Israeli Securities Authority alleged that it was in violation of local laws.
The Israeli regulator has been taking drastic measures over the last few months, in efforts to crack down harder on the binary options industry after receiving numerous complaints from traders related to fraud and unethical business practices.
Fairtrade was launched quite recently in December 2016. It does not present itself as a broker as such since its P2P platform means that investors get the chance to trade against each other thereby eliminating the broker as a middleman. Its founders, Avi Gal and Yaniv Genzer, insisted that the firm was not breaking any Israeli laws: “We offer a system of trade between people and don’t need a license in Israel as it’s P2P. The ISA is familiar with our activity and we operate according to a legal framework. The website operates only in Israel and is meant for Israelis only.”
However, the ISA argued that the firm was in breach of Israeli regulations on two accounts; it is not in possession of a valid license to operate as a securities commission and also because binary options products have been banned within Israel and are no longer allowed to be offered to local traders under any circumstances. The court accepted these arguments and ruled in favour of the ISA.
In a statement issued by Fairtrade after the ruling, the firm stated that “we respect the decision of the court. We still have the option to file a request for a securities exchange license and we are considering our future actions.”