On 5 September, 2024, the United States District Court for the Northern District of Illinois issued a Consent Order for Permanent Injunction and Other Equitable Relief in the case Commodity Futures Trading Commission v. Yakov Cohen, Yukom Communications Ltd., and others (Case No. 1:19-cv-05416). The court issued a permanent injunction against Yakov Cohen for his involvement in a fraudulent binary options trading scheme operated through Yukom Communications and its affiliated entities. The order bars Cohen from participating in commodity trading and related activities and mandates the disgorgement of US$7 million in profits unlawfully obtained through the scheme. This case is part of the United States’ Commodity Futures Trading Commission (US CFTC) broader enforcement efforts, which allege that Cohen and his co-defendants defrauded investors of more than US$165 million by manipulating binary options trades on platforms such as BinaryBook, BigOption, and BinaryOnline.
The Yukom Enterprise operated a large-scale binary options trading scam from March 2014 through at least September 2017. They solicited individuals in the United States and other countries to invest in binary options through online platforms, including BinaryBook, BigOption, and BinaryOnline. While these platforms were presented as legitimate trading services, they were part of a fraudulent operation that manipulated trades, misrepresented profits, and made it difficult for customers to withdraw their funds. The platforms falsely claimed that the binary options offered were real transactions influenced by actual market conditions, and they deceived investors by asserting that their financial interests were aligned with those of their customers.
In reality, the Yukom Enterprise profited directly from customer losses, controlling the outcomes of trades to ensure that nearly 95% of their clients lost money. The enterprise also misled customers about the security of their investments, falsely stating that customer funds were safeguarded, when in fact they were commingled with the company’s own funds. During the relevant period, the defendants fraudulently solicited over US$165 million from investors, with only about US$52 million returned to customers. Cohen personally benefited from the scheme, receiving at least US$7 million.
In the Consent Order, Cohen agreed to a permanent injunction and the payment of US$7 million in disgorgement as part of a settlement with the US CFTC. Cohen also pleaded guilty in a related criminal case for conspiracy to commit wire fraud. The Consent Order permanently bans Cohen from engaging in commodity trading and other financial activities connected to the fraudulent scheme, and it requires him to cooperate with future investigations and legal actions connected to the Yukom Enterprise.
The court found that Cohen and his co-defendants violated provisions of the US Commodity Exchange Act (US CEA) and US US CFTC regulations. The violations included Section 4c(b) of the US CEA and Regulation 32.4, which pertain to commodity option fraud. The court determined that the defendants misrepresented the nature of binary options, including the risks and profit potential, and engaged in manipulative practices that resulted in customer losses.
The court also found that the defendants violated Section 6(c)(1) of the US CEA and Regulation 180.1(a)(1)-(3), which prohibit the use of deceptive devices in connection with swaps. Cohen and his co-defendants engaged in swap transactions involving binary options without adhering to the legal requirements for such transactions. Additionally, the court found violations of Section 4c(b) of the US CEA and Regulation 32.2 regarding the execution of illegal off-exchange commodity option transactions.
The defendants were further found to have violated Section 2(e) of the US CEA by entering into illegal off-exchange retail swaps with customers who were not eligible contract participants. The court also determined that the defendants operated as an unregistered Futures Commission Merchant (FCM) in violation of Section 4d(a)(1) of the US CEA by accepting customer orders and funds for commodity options and swaps.
The court’s findings established that Cohen, through the Yukom Enterprise, misrepresented the legitimacy of the binary options offered, deceived customers about the safety of their funds, and manipulated trade outcomes to ensure customer losses. Approximately 95% of investors lost money in the fraudulent scheme, and Cohen personally profited from these losses. The consent order also required Cohen to cooperate with ongoing investigations and legal proceedings related to the case, and barred him from any future involvement in commodity-related activities. Under the terms of the Consent Order, Cohen agreed to pay $7 million in disgorgement and is permanently enjoined from engaging in trading activities involving commodity options, swaps, or any other financial instruments regulated by the US CFTC. The court retains jurisdiction to enforce the terms of the Consent Order.
(Source: https://www.cftc.gov/PressRoom/PressReleases/8962-24, https://www.cftc.gov/media/11201/enfuniswaplabsorder090424/download)
