Organized fraud on online trading platforms causes gullible private investors to lose billions of euros every year.

A few days ago German public prosecutors and police officers thwarted the plans of international masterminds of the fraudulent "cybertrading".

As the Central Office Cybercrime Bavaria (ZCB) from Bamberg and various police authorities from Bavaria announced on Wednesday, 11 arrest warrants were successfully executed in Georgia and Israel on October 19 and a total of 15 commercial properties were searched.

Eight men and three women between the ages of 27 and 47 were arrested together with the local police authorities.

Marcus Jung

Editor in business.

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According to the public prosecutors at the ZCB, which specializes in the prosecution of cybercrime, it is the lead group of a criminal organization that pretended to private investors around the world that they could invest money profitably on online platforms.

In fact, it was the accused, who would have to face a possible criminal trial for commercial gang fraud, but only concerned the money of the unsuspecting investors.

A total damage is currently not yet reliably assessable, it said on Wednesday.

But it should amount to "at least a mid-double-digit million amount".

Trading at risk of default

As in other investigative complexes, the suspects pretended to potential customers that they could trade high-risk financial instruments such as Contracts for Differences (CFD), Forex and cryptocurrencies via digital platforms. This trading of so-called binary options, using software, was tolerated in Israel, for example, until a few years ago, but was then prohibited. Since then, these companies and their backers have relocated their activities to Cyprus and Southeastern Europe. BaFin has been warning consumers against trading on dubious websites for years.

According to the investigators' findings so far, an investment or a placement of options, as well as a subsequent profit distribution to customers, never took place. In a large number of cases, the Bavarian public prosecutors are certain that individual unsuccessful alleged trades lead to a total loss of the capital invested. The starting point for the current success of the investigation was the criminal complaint by a private investor from the Upper Palatinate, who had invested money via the GetFinancial platform in October 2018. As a result, the ZCB and the police authorities started their work and were able to identify the operator of a call center in Georgia. In parallel proceedings, detectives investigated suspected cases on the trading platforms ProCapitalMarkets and MyCoinBanking.

In coordination with Eurojust, the European agency for cooperation in criminal matters, it was possible to establish contact with law enforcement officers in Israel and Georgia.

The Bamberg District Court issued the necessary search and arrest warrants.

In Tbilisi, the General Prosecutor's Office supported the project.

The ZCB plans to request the authorities in Israel and Georgia to extradite those arrested.

High number of unreported cases across Europe

The special unit made it clear that the current measures are not related to other procedural complexes.

In July 2021, the ZCB initiated arrests and searches in Bulgaria.

In addition, the prosecutors brought charges against an Israeli who is considered a close confidante of the "Wolf of Sofia".

This group of criminals alone is said to have cheated tens of thousands of investors out of up to 200 million euros.

The investigators speak of a "crime phenomenon".

They assume numerous other victims across Europe.

The dark field is considerable, since many investors are aware of the (supposedly) high risk of loss of the chosen investment type and they would mistakenly assume that this risk has materialized, write the ZBC and police headquarters in a message.

Only two weeks ago, public prosecutors from Lower Saxony and Mecklenburg-Western Pomerania uncovered a large-scale fraud on the trading platform Fx-Leader.

Offices in Cyprus, Bulgaria and Ukraine were searched and one suspect was temporarily arrested.

In this case, the investigators estimate the annual damage for investors from all over Europe at up to 500 million euros.

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