Are binary options a scam? Why Europe banned them

Binary options do not need a dishonest platform to take your money: you have to be right on more than 55% of your trades just to break even, and the platform gains when you lose.

Because of that feature of the product itself, Europe banned its sale to retail clients, and Vietnam’s Ministry of Public Security has named an entire list of platforms.

Europe’s ban targets the product, not any particular platform

The chair of the European securities regulator stated the reason plainly when announcing the ban:

“For binary options, the prohibition we are announcing is needed to protect investors due to the products’ characteristics.”

The phrase to read slowly is “the products’ characteristics”. No specific platform was named. The game itself was banned.

The timeline, so you can check it yourself:

ESMA (the European Securities and Markets Authority) banned the marketing, distribution and sale of binary options to retail investors across the EU, effective 02/07/2018, after its data showed losses among players on a wide scale.

The FCA (UK) made its ban permanent from 02/04/2019, calling binary options a product of “gambling packaged as investment”. The FCA estimated the ban would save UK consumers up to £17 million a year.

That is the regulator’s own figure for how much this product takes out of retail clients’ pockets each year, in one country alone, and not a guess by the author.

France and Belgium had banned binary option advertising before that.

In the most developed financial markets, a company is not allowed to sell binary options to retail clients. Binary option platforms therefore tend to register on offshore islands, where supervision is far lighter, and target clients in developing countries, Vietnam among them.

You are being offered a product that UK and EU consumers are banned from buying, and it is not because you are luckier than they are.

In Vietnam, the Ministry of Public Security has named an entire list

The Ministry of Public Security has warned many times that online binary option platforms show signs of organising unlicensed multi-level marketing and of fraudulently appropriating participants’ assets.

The most specific warning came on 19/08/2021, when the Department of Cyber Security and High-Tech Crime Prevention (A05) of the Ministry of Public Security named Wefinex, Raidenbo, Bitono, Pocinex, Deniex, Remitex, Ares BO, Binanex, Fxtradingmarket and GardenBO as showing signs of “organising business by unlicensed multi-level methods, fraud, and appropriation of participants’ assets”.

The document also records a telling detail: these platforms presented themselves as “foreign platforms, licensed abroad”, when in reality they were “set up by Vietnamese organisations and individuals”. The licence they advertised was the fake part.

Investigators also described the common script, and I suspect many readers will recognise it: you are invited into a Telegram/Zalo “signal” group, win a few small first trades, are encouraged to deposit large amounts and recruit others for commission, and then at some point the platform goes “under maintenance”, collapses, or locks your account.

The maths of the game: over 55% right just to break even

Try the numbers with an assumed payout of 80%. Out of every 10 trades you get 5 right: you win 5 × 80 = 400 and lose 5 × 100 = 500. Guess right half the time and you still lose.

To break even, your hit rate has to stay above 55%, consistently, on time frames of a few minutes, where price is close to random noise. No platform needs to cheat for you to lose; the payout structure does that job for them.

And at many binary option platforms there is another layer: your losses are the platform’s revenue. The platform is the “house” taking the other side of your trade directly. It gains when you lose. And the “mentor” calling the trades? The mentor earns when followers trade a lot and deposit a lot, not when they trade well.

Where binary options differ from licensed forex trading

I do not lump the two together, because the difference sits on three levels.

Conflict of interest: a seriously licensed forex broker earns mainly from spread and commission, and a regulator supervises how it executes orders; a binary option platform takes its clients’ losses directly.

Supervision: a reputable broker answers to the FCA, ASIC or CySEC, with segregation of client money, audits and compensation schemes; the binary option platforms marketed to Vietnamese people usually hold no licence from any state regulator. Some display only “certificates” from private organisations.

Tools: a binary option is a yes-or-no bet over a few minutes, with nothing to manage; forex/CFDs let you control risk with a stop loss, a risk-to-reward ratio and position size. Forex risk is still large, but at least it is a risk you can adjust.

Conclusion: do not play binary options

Do not play binary options. I cannot forbid you, but every fact here points the same way: the product structure is built against you from the start, the platform gains when you lose, and developed markets have banned its sale to consumers.

If what draws you to binary options is a wish to trade real financial markets, that path exists, but it starts with learning proper analysis and only considering brokers with genuine licences from reputable regulators, which you can trace to the source rather than take from an advert.

And if what draws you is the thrill of a quick win in 5 minutes, call it by its real name, and remember that the house always counts its share first.

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