In 2016, Britain’s Financial Conduct Authority FCA (FCA) issued a warning against MagnumOptions for “selling” services it could not actually provide as described on its website.
An investigation ensued and in October 2017, Britain’s High Court shut down both MagnumOptions and a mirror site, MagnumOptions EU, for having adopted aggressive and persistent sales practices, making unsolicited calls to victims claiming that their binary options trading could yield up an 81% return per trade.
The Insolvency Service reported that 41 complaints were made to the police regarding the fraudulent scheme, and the claims were estimated to reach £750,000. The investors specifically complained that they were told that they would receive guaranteed returns, but based on terms and conditions that were deemed to be onerous and unfair, requiring trades of 30 or 40 times account balances as a precondition for withdrawing their funds.
MagnumOptions was also the subject of investor warnings by the British Columbia Securities Commission, the Manitoba Securities Commission, the Nova Scotia Securities Commission, and the Securities Division of the Financial and Consumer Affairs Authority of Saskatchewan in Canada, as well as the Australia Securities & Investments Commission (ASIC) and Austria’s Financial Market Authority (FMA).
Launched in 2010 or 2013, depending on the source, MagnumOptions was founded by Hampshire Capital before ownership was passed to its successor, Solaris Vision Ltd. In its heyday, it claimed to be “one of the leading binary options platforms in the industry.” It also offered stocks, commodities, currency pairs, and indices. Solaris Vision Ltd. Was located in Sofia, Bulgaria.
Hampshire also founded Redwood Options, another binary site. The Hampshire director named on Britain’s corporate incorporation database was a Mr. Manford Martin Mponda, whose name also appears as the founder of yet another binary options site, Boss Capital.
The MagnumOptions site was only available in English.
MagnumOptions employed easy-to-use SpotOption 2.0 software. Its trading software was entirely web-based, so no complicated downloads were required. Their homepage prominently displayed the trading platform, market charts and asset prices without even logging in, which was very tempting to new traders.
A demo account was available but restricted to clients who had already signed up. There was no mobile app.
MagnumOptions offered six types of accounts:
- Starter, with a minimum deposit of $1,000 and a 30% bonus
- Mini-Gold, with a minimum deposit of $5,000 and a 50% bonus or one risk-free trade
- Gold, with a minimum deposit of $10,000 and a 75% bonus or three risk-free trades
- Platinum, with a minimum deposit of $25,000 and a 100% bonus or five risk-free trades
- Diamond, with a minimum deposit of $50,00 and a 100%, bonus or eight risk-free trades
- Presidential, with a minimum deposit of $100,000 and a 100% bonus or 12 risk-free trades
Seven different stocks, 24 currency pairs, nine commodities, 55 indices, and a further 11 specific pairs were available on the MagnumOptions site. The total number of trading instruments offered reached 189. This extensive offering was considered very impressive.
MagnumOptions required a minimum deposit of $200, which was below the industry average of $250. The standard minimum investment, however, was $5 – additional temptations for new traders.
Payments were made by credit or debit card, wire transfer, CashU, or WebMoney. The currencies accepted were the euro, U.S., Canadian and Australian dollars, the pound sterling, Japanese yen, and Russian ruble.
MagnumOptions had a lot to offer traders in terms of trading tools and educational resources. These resources included a trading e-book, a number of video tutorials, and online webinars. It also featured a“Strategy Advisor,” comprised of several different indicators that traders could add to their individual charts. Additional webinars, videos, and training sessions were made available to higher account tiers, along with market reviews and other benefits.
All account holders were also provided with a “social trading” option to copy from the best traders on the site.
The support team could be contacted by email, telephone, live chat, by submitting an online form, as well as traditional mail. Service was generally regarded as exceptional.
MagnumOptions was unlicensed.