Medan, Indonesia – Indonesian influencers Indra Kesuma and Doni Salmanan lived the kind of lives most people can only dream of.
On his now-deleted Instagram, 25-year-old Kesuma, aka Indra Kenz, regularly posted pictures of himself posing next to luxury cars and sporting designer watches and clothes.
During an appearance on the TV show, Crazy Rich Indonesia, in January, Kesuma, from Medan in North Sumatra, regaled the audience with stories of buying $30,000 T-shirts, while Bandung-based Salmanan, 23, bragged of gifting $100,000 to an online gamer simply because he had nothing better to do.
Kesuma and Salmanan attributed their extravagant wealth to successful trading on Binomo and Quotex, respectively, binary option trading apps that allow users to bet on a stock’s rise or fall within a strict time limit to be in with a chance to win a fixed monetary amount.
But while Kesuma and Salmanan claimed to have made their fortunes on the apps, dozens of others say they lost huge sums in what Indonesian authorities are calling an elaborate financial scam.
In February, just a month after discussing his self-made wealth on national television, Kesuma traded his designer T-shirts for an orange jumpsuit when he was arrested by Indonesian police. Police arrested Salmanan the following month.
Both men now face charges of fraud, online gambling, money laundering and violating Indonesia’s Electronic Information and Transactions Law (ITE) by spreading so-called fake news. At press conferences in March, Kesuma and Salmanan apologised for their actions, expressing hope their arrests would serve as a warning to other would-be investors.
Kesuma’s lawyer did not respond to a request for comment, and news efforts to reach Salmanan’s legal representative were unsuccessful.
“We need to look at more than just Indra Kenz and the Binomo case,” Adinova Fauri, an economist at the Center for Strategic and International Studies (CSIS), told.
“The practice of illegal online trading platforms in Indonesia keeps rising, even though the government keeps trying to block them.”
According to police reports lodged by the alleged victims, the problems with the apps began as soon as users signed up using affiliate codes provided by Kesuma and Salmanan.
“The ‘trading’ mechanism that Binomo used was clearly unreasonable from the start,” Vinsensius Sitepu, a financial journalist and private investor, told.
“The data varied between users, the time span to choose whether stock prices would go up or down was ridiculously short. There were user accounts that just closed suddenly, funds couldn’t be withdrawn, and so on,” Sitepu said.
“The Binomo system seemed designed to make users keep losing.”
At a press conference last month, authorities announced they had identified 118 alleged victims so far who had collectively lost more than 72 billion Indonesia rupiah ($5m).
Police have also seized luxury cars and assets from Salmanan and Kesuma worth some $8.25m.
“In reality, Doni Salmanan did not trade on the website and was only an affiliate to benefit from members,” Brigadier General Suheri said at the press conference.
‘Greater the profit, greater the risk’
According to investigators from Indonesia’s cybercrime unit, Kesuma and Salmanan received about 80 percent of the money that users lost when they signed up for trading accounts using the affiliate codes provided by the two men.
Before the arrests, Kesuma attracted more than 200,000 members to a Telegram group used to bring in new Binomo users, while the Quotex Telegram group operated by Salmanan had more than 25,000 users.
“The police were negligent and slow in how they handled this, even though things had been wrong for a long time with Binomo and other rogue applications,” Sitepu said, adding that many people were particularly vulnerable during the pandemic as they were “out of work or not making as much money as they usually would”.
“They should have been shut down at a much earlier stage.”
Zamroni Salim, the head of the Research Center for Macroeconomics and Finance at the National Research and Innovation Agency (BRIN), said the case showed the need for Indonesians to take greater care when investing.
“The case against Binomo and Indra Kenz arose because of complaints from the public who felt that they had lost money because of this kind of investment. But this didn’t need to happen,” Salim told.
“There is a saying in trading: Only invest the amount of money that you can afford to lose. This is one of the fundamentals of investment, that in the name of investment there must be risk. The greater the potential profit, the greater the risk, but Indonesian people tend to be easily lulled by the lure of grandeur, especially if it is conveyed or advertised by celebrities and public figures.”
Fauri, the CSIS economist, said binary trading sites have had particular appeal due to their association with influencers living seemingly lavish lifestyles.
“Public figures advertise those products, and it attracts people and combines with a lack of digital literacy,” he said. “It has to change. They should only advertise if the product has a permit or licence from Financial Services Authority of Indonesia (OJK) or Commodity Futures Trading Regulatory Agency (Bappebti).
While Salmanan and Kesuma are facing up to 20 years each beyond bars, authorities appear powerless to do much about the apps themselves, which do not have a physical presence in Indonesia.
While the police investigation is still continuing, it is unclear to whether the platforms were involved in Salmanan and Kesuma’s alleged fraud.
Binomo is registered to Dolphin Corp, a company in Saint Vincent and the Grenadines in the Caribbean, while Quotex is registered in the Seychelles. The ownership of the companies remains unclear.
Police say Salmanan and Kesuma have refused to confirm whether they are working for anyone else, although they suspect more people are involved.
In 2021, Binomo was the fourth most downloaded finance app in Indonesia, although it has since been blocked and is no longer available on Google Play Store or the Apple App Store.
Quotex has also been blocked in Indonesia along with hundreds of similar binary trading sites. Binomo and Quotex did not respond to requests for comment.
“As long as the company is still standing somewhere, Binomo will still be able to continue its activities,” Sitepu said. “Apps like these are very hard to stop without cooperation between countries.”
“If we think of Binomo as a snake, it needs to be beheaded. What we’ve got so far is only the tail.”