From Binary Options to DeFi Brokers: The Same Perimeter Game on New Rails

Expanding Compliance Focus into the DeFi Space

Scam-Or Project is broadening its compliance monitoring efforts. In addition to offshore casinos and their payment infrastructures, the focus will increasingly shift toward DeFi brokers and DeFi-based investment models.

The rationale is simple: the classic perimeter game has not disappeared—it has transformed. Where binary options providers and offshore CFD brokers once relied on shell entities, payment intermediaries, and loosely supervised cross-border channels, a new wave of platforms now leverages DeFi narratives, wallet-based onboarding, fiat-to-crypto conversion layers, perpetual trading venues, and so-called “interface-only” structures to attract retail users.

Although MiCA was designed to address aspects of this evolving ecosystem, the pace of market innovation continues to outstrip regulatory safeguards and investor protection mechanisms.

Key Findings

Scam-Or Project identifies a strong structural continuity between legacy broker models and emerging DeFi ecosystems:

• A clear evolution from binary options and CFD schemes toward DeFi broker structures.
• ESMA’s 2018 intervention addressed serious investor harm, banning binary options for retail users and restricting CFDs.
• MiCA does not exclude services simply because parts are decentralized; Recital 22 confirms applicability where identifiable actors are involved.
• Only fully decentralized, intermediary-free services fall outside MiCA’s scope.
• EBA and ESMA have warned that “DeFi” is not a legal classification and carries significant AML/CFT risks.
• Recent investigations into Hyperliquid and AXIOM demonstrate that DeFi brokers require systematic regulatory scrutiny.
• Future reporting will prioritize DeFi brokers, DeFi investment schemes, and fiat-to-crypto transition infrastructures.

Why Scam-Or Project Is Expanding Coverage

Scam-Or Project originated during the rise of binary options and offshore brokerage schemes. At that time, the pattern was consistent:

• Aggressive retail targeting
• Lack of transparency
• Outsourced and fragmented payment systems
• Weak disclosures
• Business models built around regulatory arbitrage

ESMA’s intervention in 2018 reflected widespread investor harm. Binary options were banned for retail investors, while CFDs were subjected to:

Today, while the packaging has changed, the underlying dynamics remain strikingly similar.

The Transition from Binary Options to DeFi

Previously, offshore brokers sold high-risk speculative products under the promise of easy profits. The modern DeFi landscape often replicates this model—but with greater structural complexity.

A typical DeFi broker setup may include:

• Branded front-end interface
• Wallet onboarding process
• Fiat on-ramp or aggregator
• Transaction routing layer
• Trading or yield-generating venue
• Embedded licensed or semi-regulated entities

This layered structure complicates accountability. The presence of a regulated component—such as an on-ramp—does not guarantee that the end platform operates within regulatory boundaries.

MiCA Recital 22 clarifies this:
Services fall under regulation if identifiable actors control or influence them, directly or indirectly. Only fully decentralized systems without intermediaries are excluded.

New Rails and Increasing Complexity

In the binary options era, the ecosystem relied on:

• Payment processors
• Acquiring banks
• Shell companies
• Offshore jurisdictions

In contrast, today’s DeFi environment introduces more sophisticated and opaque mechanisms:

• Fiat-to-crypto on-ramp providers
• Aggregation layers
• Self-custodial or hybrid wallets
• Cross-chain bridges
• Perpetual trading platforms
• Staking and yield products

This complexity is not incidental—it is fundamental to the business model. It allows operators to distribute responsibility across multiple entities:

• Interfaces claim they only provide access
• On-ramps limit their role to fiat conversion
• Protocols emphasize decentralization

Meanwhile, users experience a unified system, unaware of fragmented accountability.

Investigations into Hyperliquid and AXIOM illustrate how leveraged crypto trading can be embedded within such architectures.

Regulation Still Lags Behind Innovation

This dynamic mirrors the binary options era.

By the time ESMA imposed restrictions in 2018, significant retail damage had already occurred. The same pattern is emerging in the DeFi sector:

• Rapid technological innovation
• Slow regulatory interpretation
• Expanding retail exposure

EBA and ESMA have already emphasized:

• “DeFi” is not a legal category
• The sector presents material AML/CFT and conduct risks

While MiCA introduces a regulatory framework—including authorization regimes and centralized registers—it is already being tested by hybrid models, layered infrastructures, and interface-driven access strategies.

The Need for Early Investor Protection

The failures of the binary options market offer a clear lesson.

That sector resulted in:

• Massive financial losses
• Widespread enforcement actions
• Significant harm to retail investors

The issue was not only product risk—it was delayed oversight combined with opaque structures.

Scam-Or Project aims to identify these risks earlier by:

• Mapping underlying payment and access rails
• Exposing structural patterns
• Highlighting accountability gaps

The goal is to prevent another large-scale retail-investor crisis.

Future Coverage Areas

Scam-Or Project will focus on four main areas:

1. DeFi Brokers

Platforms offering:

• Leveraged trading
• Perpetual contracts
• Synthetic exposure
• Broker-like crypto services

2. DeFi Investment Schemes

Including:

• Yield products
• Staking mechanisms
• Vaults and “earn” programs

3. On/Off-Ramp and Wallet Infrastructure

Analysis of:

• Fiat-to-crypto entry points
• Conversion pathways
• Wallet-based transaction flows

4. Regulatory Perimeter Monitoring

Tracking:

• MiCA boundary cases
• “Interface-only” defenses
• Non-custodial claims
• Involvement of licensed entities

This approach is not anti-crypto. It is focused on compliance, transparency, and investor protection.

Summary Compliance Statement

Scam-Or Project considers DeFi brokers and DeFi investment models to be the next major regulatory challenge in digital finance.

The shift from binary options and offshore brokers to DeFi-branded ecosystems does not reduce risk—it often amplifies it through:

• Increased technical complexity
• Multi-layered execution structures
• Fragmented responsibility

MiCA provides a critical regulatory foundation, but significant gaps remain—particularly where identifiable actors control access to crypto services through branded interfaces and supporting infrastructures.

Accordingly, Scam-Or Project will intensify its oversight of this sector, continuing its mission of exposing systemic risks in financial ecosystems.

Call to Whistleblowers and DeFi Participants

If you are involved in the DeFi ecosystem—as an investor, trader, developer, insider, or service provider—you can share information confidentially via the Scam-Or Project whistleblower section.

We are particularly interested in:

• Internal compliance reports
• Wallet architecture and routing logic
• On/off-ramp integration models
• KYC/AML processes
• Hidden operators and control structures
• Partnership agreements
• Geo-targeting strategies
• Leverage and liquidation systems
• Investor complaints and internal risk discussions

Final Note

The lesson from the binary options era remains clear:

When innovation outpaces transparency and oversight, retail investors bear the consequences.