The Israeli cabinet on Sunday approved a bill to ban the entire binary options industry, a multi-billion dollar, widely fraudulent, Israel-based enterprise, whose activities have been exposed in a series of articles by The Times of Israel since March 2016.

The bill was immediately also approved by the Ministerial Committee on Legislation, and will now go to the Knesset plenary for a first reading. It will then be debated by the Knesset Finance Committee, ahead of a second and third reading in the plenary.

Israel Securities Authority Chairman Shmuel Hauser, who drafted the law together with the attorney general and Justice Ministry, welcomed the ministerial approval of the law.

Get The Start-Up Israel's Daily Start-Up by email and never miss our top stories Free Sign Up

“Beyond the terrible economic harm to citizens around the world, sellers of binary options are causing increasing, accelerating ruinous damage to Israel and are inflaming anti-Semitism and anti-Israel feeling,” Hauser said in a statement after the bill was advanced.

Once passed, and following a three-month interim period, the law will allow the ISA to prosecute and jail anyone still peddling binary options from within Israeli territory to anybody, anywhere.

Fraudulent Israeli binary options companies, which employ thousands of Israelis, ostensibly offer customers worldwide a potentially profitable short-term investment, but in reality — through rigged trading platforms, refusal to pay out, and other ruses — these companies fleece the vast majority of customers of most or all of their money. The fraudulent salespeople routinely use false identities, conceal where they are located, and misrepresent what they are selling.

“I welcome the important decision that the cabinet took today,” said Eli Groner, the director-general of the Prime Minister’s Office. Last October, alerted by The Times of Israel to the massive, decade-old, Israel-centered fraud, the Prime Minister’s Office issued a call for binary options dealing to be banned worldwide.

“As part of our commitment, we are continuing our actions against binary options that cause damage to Israel’s image in the world. After we saw that other countries are not outlawing binary options, Israel is taking responsibility in order to prevent the defrauding of innocent people,” Groner said on Sunday.

Attorney General Avichai Mandelblit also welcomed the vote. In a statement, the attorney general’s office wrote that he “has directed various law enforcement agents to act to eradicate the criminal phenomena associated with these online trading platforms, which in recent years mostly target people abroad.”

Jason Roy, chairman of Canada’s Binary Options task force, also expressed satisfaction. “The world has woken up to this global fraud and we are seeing governments, securities regulators, law enforcement, credit card companies and social media companies all working together to protect people,” Roy told The Times of Israel.

Unveiled at a session of the State Control Committee on February 28, the bill to ban the industry languished for several months amid rumors that lobbyists for binary options brokers were working to block its passage at the Ministerial Committee for Legislation. Proponents of the industry argued strenuously against a ban at the February meeting of the State Control Committee.

Finance Minister Moshe Kahlon, who presented the bill to the cabinet, is a firm supporter of the proposed law. The legislation is also backed by the State Control Committee’s chair, opposition Yesh Atid MK Karin Elharar.

The draft legislation was approved by ministers more than a year after The Times of Israel began exposing the widespread fraudulent practices of the binary options industry. Last August, Hauser promised he would take the necessary steps to thwart the fraudsters. That same month, Jewish Agency chief Natan Sharansky urged the government to close down the “repugnant, immoral” industry.

Israel banned binary options firms from targeting Israelis more than a year ago. The proposed law greenlighted on Sunday bans all binary options trading, period, and thus aims to put a complete halt to the blight of Israeli binary options firms duping victims all over the world into parting with their money. (The draft law also targets unregulated forex and CFD companies operating from Israel, requiring them to obtain a specific license to operate in any country where they have customers. Many such companies operating from Israel also engage in fraudulent practices.)

Speaking on Channel 2’s “Meet the Press” program on Saturday, Hauser said that his authority had received hundreds of complaints from victims of the scam as well as from financial regulators around the world.

“The [overseas] regulators tell us, ‘You have to do something, it’s like you’re turning a blind eye to this,’” he said. “I’m telling you,” Hauser added, “these binary options are a greater cause of anti-Semitism than any other factor. This is stoking anti-Semitism.”

At a recent global meeting of securities regulators, he added, dozens of officials, from the United States, Canada, Belgium, France and beyond, all lined up and said to the Israeli officials, “You have to do something.”

Hauser also mentioned two deaths as a result of binary options fraud. Last December, Canadian businessman Fred Turbide died by suicide after losing most of his life’s savings to an Israeli binary options company called 23Traders. Just recently, the Israel Securities Authority learned of another death, of an elderly woman on the island of Sardinia who lost a large sum to an Israeli binary options firm.

Apple earlier this month banned binary options trading apps from its online store. In March, the FBI placed a public warning against binary options fraud at the top of its website.

The Times of Israel, beginning with a March 2016 article entitled “The wolves of Tel Aviv: Israel’s vast, amoral binary options scam exposed,” has exposed the largely fraudulent Israel-based industry that has been stealing billions of dollars from hundreds of thousands of victims worldwide for the past decade.

The proposed law would give the ISA the authority to impose penalties of up to two years in prison to anyone who violates the ban.

The law would apply to anyone who “manages an online trading platform” that either sells binary options abroad or sells another financial product in a country where it lacks a license. The proposed law defines managing an online trading platform as “making strategic decisions for a company that manages the trading web site” or “operating the web site, including through software or hardware systems, call centers or online or telephone marketing, either directly or through a company that manages the trading web site or provides services to the web site.”

The Israeli binary options industry, which has flourished for a decade with almost no intervention by Israeli law enforcement, has been estimated to bring in between $5 billion and $10 billion a year, to number well over 100 companies, and to employ between 5,000 and many tens of thousands of employees.

Last month, in a move that indicated the Israel Police had finally begun to tackle the multi-billion dollar global fraud, Eliran Saada, the Tel Aviv owner of a fraudulent binary options firm, was arrested on suspicion of aggravated fraud, misrepresentation, false accounting, forgery, extortion and blackmail.

In recent months, in anticipation of the proposed law, several binary options companies have shut down, while many have relocated their call centers abroad, including to Ukraine and elsewhere in Eastern Europe.