Britain’s Insolvency Service has successfully shut down a major unlicensed and unregulated online binary options brokerage, Magnum Options EU, which had been operated by Bulgarian-registered Hampshire Capital Ventures Ltd. and its successor, Solaris Vision Ltd.
The British authorities acted after 41 separate complaints were made to the police accusing Magnum Options of committing online fraud over 13 months beginning in February 2016. Victims reported losses in excess of £750,000.
An official investigation found that both Hampshire and Solaris misrepresented themselves to unsuspecting customers worldwide as British-based by using a local address on their website that turned out to be nothing more than a mail drop. Their operations were, in fact, located in the Bulgarian capital of Sofia. They did not have a British brokerage license and were not registered to conduct business in the United Kingdom. Neither company, nor their common sole director, Hristo Stilianov Dobrev, cooperated with the investigation.
Moreover, the police investigation into the binary options fraud confirmed that Magnum’s websites made numerous false claims, including the unfounded assertion that they could deliver an 81% rate of return per trade. In addition, many terms and conditions, judged to be “onerous and unfair,” were not disclosed to customers when they signed up. For example, customers requesting to withdraw funds from their accounts discovered only then and there that they had to “invest” 30 or 40 times their account balances in order to recover even a small portion of their initial investments. These surprise terms and conditions, however, were only a ruse to prevent customers from withdrawing any funds, since some were unable to do so even after making such exorbitant payments. Another ruse used by the companies to avoid account withdrawals was simply ignoring requests from their customers entirely. There were also instances in which the companies fraudulently used customer credit or debit cards to charge for services that were not even offered, let alone provided.
Acting on the request of the Insolvency Service, therefore, the High Court in London placed Solaris Vision Ltd. into provisional liquidation on August 8 due to concerns that it posed an ongoing risk to the public by operating a fraudulent trading platform. The Magnum Options website was taken down on September 25.
Canadian and Australian financial authorities had previously issued warnings about Hampshire Capital and advised the public not to invest in Magnum Options.