In the first six months of this year 697 people reported having lost money to this type of fraud.
It is one of the frauds which an increasing number of consumers are contacting the Financial Conduct Authority about.
A binary option is a financial option in which the payoff is either some fixed monetary amount or nothing at all.
Earlier this week the City of London Police, which runs Action Fraud, conducted a day of action and visited 20 offices in the City with Trading Standards.
Chief Superintendent Glenn Maleary, the City of London Police’s head of the economic crime directorate, said: “This multi-agency operation allowed us to speak with multiple businesses and gather significant intelligence around various investments currently being traded in the City.
“With our partners we want to ensure the City is a hostile environment for fraudsters to operate in and we will continue to do everything we can to ensure that this is the case.
“Throughout this year we have been raising awareness of binary options fraud and over the coming days we will be providing more advice on how people can beat the boiler rooms and protect themselves from all types of investment fraud.”
While binary options theoretically play a role in asset pricing, they are prone to fraud and banned by regulators in many jurisdictions as a form of gambling.
A total of 17 per cent of all investment product-related enquiries to the FCA between 1 December 2016 and 30 November 2016 were about this type of trading.
In August Money Saving Expert founder Martin Lewis warned that his name was being used to encourage consumers to invest in binary options “scams”.
The Action Fraud team, which was assisted by the FCA and HM Revenue & Customs, said it found “interesting results” including a business that had paid more than three months’ rent upfront to a serviced office provider and then disappeared.
Work will now take place to establish information about this company and investigate whether it was a boiler room.
Over the next six months an intelligence picture will be developed using the information gathered from the day of action to prevent investment fraudsters from operating in the City of London.
Steve Playle, Trading Standards manager for the City of London Corporation, said: “Working closely with our partners, we are deterring investment scammers who use City addresses to create an illusion of respectability that plays an important part in persuading people to part with their money.