At least 30 people, including finance executives and retirees, have made complaints over losses in trading of binary options, with one person US$150,000 (S$216,000) out of pocket, the police said yesterday.
These investors have lost more than $1 million to unregulated trading platforms, police had said on Wednesday. The complaints began escalating in May, with officers believing victims were lured into the risky trades by websites - mostly unregulated entities claiming to be based in places such as Britain, Cyprus and Hong Kong - promising high returns and other rewards.
Police issued a warning on Wednesday, advising investors to check lists compiled by the Monetary Authority of Singapore (MAS) to find out which investment service providers are regulated.
Binary options trading involves trying to predict if the price of a financial product - say, shares or a currency - will be above or below a level at a specified point in time. If the prediction is correct, the trader will be paid; if not, he loses his money.
Some investors are drawn to websites promising high profits and quick returns, or even job opportunities, where they are asked to provide personal details.
Representatives of these platforms call or e-mail victims, asking them to open trading accounts with deposits. Some pay with debit or credit cards or give out those details.
The staff also persuade victims to keep depositing more money for trades with promises of better financial advice, more bonuses and rewards. Some are prompted to deposit even more money after initial trades which appear to be profitable in their online trading accounts, but later find that they cannot withdraw any profits or get back their capital.
These sorts of scammers are considered difficult to catch, especially when they are dealing with unregulated financial products.
Mr Tony Lim, chief executive of broker IG Asia, regulated by the MAS, added: "It is critical that investors understand the significant risks involved in dealing with unregulated and offshore binary brokers who may not be operating under any regulated regime, and (when) the investors may not be able to enforce their rights with a supervising regulator."
He noted that while binary options are risky, they serve a purpose as "non-leveraged investments, meaning the investor will never lose more than what he has invested".
Investors here must pass a customer knowledge assessment before investing in binaries and other derivative products, he said.
Mr Terence Tan, an experienced options trader who started a financial education business, said: "Binary options are very much like betting on soccer matches where you try to predict as best as possible the ending outcome of the bet itself.
"For those who choose to take the risk, know exactly what they are doing and are ready to take responsibility for their choices, it is their decision, but surely binary options have to be viewed more as a speculative product."