There's nothing wrong with settling in cash. There is something wrong with failing to maintain the separation between marketplace and counterparty. There's no meaningful settlement at all here; there is literally no way to get USD into or out of this site--you just get BTC back on take-it-or-don't terms.

You're playing craps, only the dealer rolls the dice for you behind a screen and tells you if you won or not.

I wasn't familiar with the specific subspecies of this called "Binary Options" before, but even basic investigation makes it clear that yes, Binary Options are a scam product. There do not appear to be any legitimate binary options marketplace/peddlers.

There's no reason you couldn't structure an exactly equivalent product out of legitimate securities, so there's no reason for this product to exist outside of running cons.