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eToro, a prominent online trading platform, has settled with the US Securities and Exchange Commission (SEC) and agreed to cease trading nearly all crypto assets for US customers, according to the latest release from the SEC.
The SEC charged eToro with operating as an unregistered broker and clearing agency for facilitating the trading of crypto assets deemed securities.
As part of the settlement, eToro has agreed to pay a $1.5 million penalty and will restrict its US trading services to a limited number of digital currencies.
SEC Enforcement And eToro’s Response
The SEC’s investigation found that since 2020, eToro has allowed US customers to trade crypto assets on its platform without complying with federal securities laws.
The regulator determined that eToro’s services fell under the scope of broker-dealer and clearing agency regulations because certain crypto assets offered on the platform were considered securities.
In response, eToro has agreed to remove most digital currency assets from its platform and offer only limited options for US traders moving forward.
Notably, the SEC’s order comes as part of its broader effort to regulate the digital currency industry and ensure that trading platforms comply with existing laws governing securities.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized that eToro’s decision to remove tokens offered as investment contracts from its platform demonstrates a willingness to comply with the established regulatory framework. Grewal added:
This resolution not only enhances investor protection but also offers a pathway for other crypto intermediaries. The $1.5 million penalty reflects eToro’s agreement to cease violating applicable federal securities laws as it continues its U.S. operations.
Furthermore, as part of the settlement, eToro will allow its U.S. customers to sell their remaining crypto assets within 180 days. After this period, any crypto assets considered securities that have not been sold will be liquidated by eToro, and the proceeds will be returned to customers.
According to the release, eToro’s agreement to the cease-and-desist order and the imposed penalty was without either admitting or denying the SEC’s findings.
Future Of eToro And Crypto Asset Trading
In the future, eToro’s platform in the US will offer trading in only three major cryptocurrencies—Bitcoin, Bitcoin Cash, and Ethereum. This marks a significant shift in the platform’s offerings as it seeks to operate within the SEC’s guidelines.
The removal of other tokens could impact the company’s user base in the US, as eToro was previously known for providing access to a broad range of digital assets.
The release revealed that the SEC’s investigation into eToro was conducted by the agency’s Crypto Assets and Cyber Unit. The case involved key officials and other SEC enforcement team members.
Featured image created with DALL-E, Chart from TradingView
