Three Canadians who ran a binary financial business that allegedly took in $233 million from investors, are alleged to have engaged in the illegal distribution of securities that impacted investors from several countries in the world.
The three are Josh Cartu, Jonathan Cartu and David Cartu. The binary business was allegedly operated in Israel.
The Ontario Securities Commission (“OSC“) commenced proceedings against them, inter alia, to enjoin them from selling securities or acting as directors or officers of an issuer in Ontario and seeking the payment of a fine of $1 million each for violations of the Ontario Securities Act.
The three allegedly operated under a number of corporate entities including Tracy PAI Management Limited, UKTVM Ltd. and Greymountain Management Limited.
Payment processing operation
Greymountain was alleged to be a payments processor for the brothers and many other binary financial companies who presumably were de-risked by financial institutions or unable to obtain banking. It provided services to a company operated by California native Jason Scharf, who pled guilty to wire fraud as CEO of a binary finance company that took US$8 million from investors for binary options products. Scharf is incarcerated in a medium security jail in Oregon until January 2024.
The sales to residents of Ontario are alleged to have been placed through two online platforms – beeoptions.com and www.glenridgecapital.com, both of which are now defunct websites.
In Ontario, the scheme is alleged to have taken $1.4 million from 700 residents of Ontario over a four year period. The OSC says that the brothers lied about their operations, used aliases, and obscured their connection to the payment processing companies they owned and operated.
Not YouTube shy
The Times of Israel reported that one of the Canadians formerly ran an online gambling website from Limassol, Cyprus. The Times of Israel posted some social media coverage of one or more of the Canadian brothers, including the birthday celebration of one of them, below.
And a tour of the condo of Josh Cartu in District V in Budapest.
One son put his father from Canada on YouTube in one of the beeoptions.com logo’ed racing cars.
The Times of Israel reported that the brothers, or one of them, may be in Canada now. Two of the three brothers are in the Ferrari database as owners of a 2017 Ferrari 458 Challenger.
House always won even when it didn’t
Options, even if they are binary, are a securities and securities activities are regulated.
The way it works is that a person is asked to buy an option. Unlike a stock option, this type of option is a gamble on the future price of a publicly traded stock (or Bitcoin, a currency or a commodity) at a certain time. The gamble on the future price is a yes / no proposition (hence the word binary). The terms of this type of option typically promise a percentage (for example, 25%), if the bet placed by the investor is correct. If the bet placed on the option loses, the person loses the money wagered in the bet.
However, in the case of beeoptions.com and its sister operation, the OSC says that it operated like a boiler room cold calling centre, where employees called Canadians from Israel to solicit sales, and that the house always won, even when it didn’t.
In the US, the CFTC regulates the trading of options contracts and regulated activities are listed on regulated exchanges.