Spot Tech House, Ltd., formerly known as Spot Option, Ltd., Malhaz Pinhas Patarkazishvili and Ran Amiran

On Friday, April 16, 2021, the Securities and Exchange Commission charged Israeli-based Spot Tech House, Ltd., formerly known as Spot Option, Ltd., and two of its former top executives, Malhaz Pinhas Patarkazishvili (also known as Pini Peter) and Ran Amiran, with deceiving U.S. investors out of more than $100 million through fraudulent and unregistered online sales of risky securities known as binary options.

According to the SEC’s complaint, Spot Option – under the control of Patarkazishvili, the company’s founder and former chief executive officer, and Amiran, the company’s former president – defrauded retail investors worldwide through a scheme involving the sale of online binary options. Binary options are securities whose payouts are contingent on the outcome of a yes/no proposition, typically whether an underlying asset will be above or below a specified price at the time the option expires. The SEC has previously charged several entities and individuals in connection with their involvement in the sale of binary options using the Spot Option platform, including in the SEC v. Banc de Binary, SEC v. Beserglik, and SEC v. Senderov cases.

The SEC alleges that the defendants developed nearly all of the products and services necessary to offer and sell binary options through the internet, including a proprietary trading platform, and that they licensed these products and services to entities they called “white label partners,” who directly marketed the binary options. According to the complaint, Spot Option instructed its white label partners to aggressively market the binary options as a highly profitable investment for retail investors. As alleged, investors were not told that the defendants’ white label partners were the counter-parties on all investor trades, and thus profited when the investors lost money. To ensure sufficient investor losses and make the scheme profitable, Spot Option allegedly, among other tactics, instructed its partners to permit investors to withdraw only a portion of the monies the investors deposited, devised a manipulative payout structure for binary options trades, and designed its trading platform to increase the probability that investors’ trades would expire worthless. According to the complaint, the defendants’ deceptive business practices caused U.S. and foreign investors to lose a substantial portion of the money they deposited to their trading accounts. The defendants allegedly made millions of dollars as a result.

The SEC’s complaint, filed in federal district court in Nevada, charges Spot Tech House, Ltd. with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder; and it charges Malhaz Pinhas Patarkazishvili and Ran Amiran with violating Sections 5(a) and 5(c) of the Securities Act, and for being liable as control persons under Section 20(a) of the Exchange Act, for Spot Tech House’s violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC’s complaint seeks disgorgement of ill-gotten gains, prejudgment interest, financial penalties and permanent injunctions against all three defendants.

The SEC’s investigation was conducted by Deborah Maisel and Jason Anthony and supervised by Jennifer S. Leete and Melissa R. Hodgman. The SEC’s litigation against the defendants will be led by Kenneth W. Donnelly and Samantha M. Williams and supervised by Fred Block. The SEC appreciates the assistance of the British Virgin Islands Financial Services Commission, the Financial Supervision Commission of Bulgaria, the Czech National Bank, the Hong Kong Securities and Futures Commission, the Central Bank of Ireland, the Israel Securities Authority, the Swiss Financial Market Supervisory Authority, and the United Kingdom Financial Conduct Authority.

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