The news of the criminal charges in the US, which can now be reported after an indictment was unsealed in recent days, come as iSignthis’s shares remain suspended from trading on the ASX as it answers regulatory enquiries.
No one at iSignthis has been accused of links to Yukom.
iSignthis was due to submit its reply to the latest queries from market operator ASX on Friday. The ASX will then decide whether to release the company’s response to the market.
Mr Cohen and Mr Herzog were last year found by an Australian court to be the operators of AGM Markets – a group at the centre of an alleged binary options scam operating in Australia and offshore that ASIC told the court used sales and retention techniques that were remarkably similar to Yukom.
Thirteen other people in Israel allegedly linked to the Yukom scam have also been charged with fraud offences in the US over their involvement in the $US140 million fraud.
Last month, iSignthis released a response to ASX queries that confirmed more than one-quarter of the revenue it generated during the June 2018 half year came from AGM Market clients OT Markets and Ozifin.
This June 30 financial performance resulted in bonus shares being issued to iSignthis insiders which are now worth hundreds of millions of dollars.
According to ASIC submissions to the court to shut down AGM, OziFin and OT Markets, the three companies “transferred large sums of money from bank accounts in Australia to companies and people overseas.” This included companies associated with the “controlling minds” behind AGM Markets, OT Markets and Ozifin including Mr Cohen and Mr Herzog.
Yukom operated two websites that allegedly scammed customers – BinaryBook and BigOption, according to US authorities.
The group based out of Israel also had offices in Australia, according to evidence given by FBI Special Agent Greg Fine at the trial of Yukom chief executive Lee Elbaz earlier this year.
ASIC had alleged in its case that: “The controlling minds of AGM Markets were associated with Yukom Communications Ltd and its chief executive officer Ms Lee Elbaz.”
In the US criminal case, those charged are accused of making false statements to investors about their ability to withdraw funds once they had invested through the trading platform.
Other allegations including misleading investors by making false statements about the suitability of binary options as a product, lying to customers about their location and qualifications and omitting information about the incentives paid when investors lost a bet.
“In truth and in fact, when investors lost money, Cohen and Herzog as principals of the Binary Options Organisation profited,” the US Justice Department alleges.
All people charged are based in Israel though the alleged scam had offices in Mauritius, Turkey and Australia.
According to the US criminal case, Mr Cohen used the aliases “Jay Collins” and “Kobe Cohen” while Mr Herzog was also known by the name Yossi Herzog.
Last week the market operator and iSignthis were in open dispute over what lead to its ongoing suspension from trading.
iSignthis said it had received a written statement from ASIC stating “the decision by ASX to suspend ISX Ltd (iSignthis) from trading on 2 October 2019 was not made with a direction from ASIC”.
Emails seen by The Sydney Morning Herald and The Age reveal how the market operator ASX allowed iSignthis to release the announcement despite misgivings about “potentially misleading aspects” of the company’s statement.
The ASX issued a reply within minutes saying it “at no time represented to ISX or anyone else that the suspension of ISX’s securities on 2 October 2019 was at the direction of ASIC”.
Sarah Danckert is a business reporter.
Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.