Scam trading is 'dark side' of Israel tech leap


Israeli internet companies offering customers around the world the opportunity to trade in "binary options" and speculate on currency fluctuations - the "forex" markets - are coming under scrutiny.

Many of the companies employ new immigrants to Israel from English, French and Spanish-speaking countries, so they can sound professional and reassuring when offering customers their services over the phone.

Probes by the Times of Israel website and a number of independent investigators have alleged that the "trading" being offered is actually a form of online gambling, as the customers have no knowledge or experience to allow them to make any informed decisions and they stand to lose their money.

One man, a recent immigrant to Israel from Britain who wished to remain anonymous, worked in a forex company for six months. He said he felt "unclean" when he realised that the services he was offering over the phone were not simple currency trading. "As a new immigrant without contacts or a local diploma, this was the best job I could get, making nearly $2,000 a month. I quickly began to hate it because you are basically scamming people, but all I had to sell on the jobs market was my fluent English. I was glad when I finally found another job which paid a bit less but at least I can now sleep at night."

The legal status of these companies, many of which are registered abroad, is not clear, and the Israeli authorities have yet to investigate them.

They are registered in tax havens like Gibraltar or Jersey

"It's the dark side of the Israeli high-tech miracle," said one technology executive. "Everyone likes to talk about the great successes of software companies and start-ups that are sold to companies like Google and Apple, but there's a whole part of the industry working for the less respectable businesses like online gambling, search-engine manipulation and forex. Often they offer software engineers twice what they can make in the more respectable companies."

"The offices of these companies are registered in tax havens like Gibraltar or Jersey, and some of the management is there as well," said an executive in an Israeli online gambling company. "But the entire software and support staff, as well as the call centres, are in Israel because of the availability of highly-qualified software people and native English-speakers. But the two groups are usually kept apart."

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