EToro has reached a $1.5 million settlement with the U.S. Securities and Exchange Commission for alleged violations of federal securities laws.
According to a settlement disclosed by the SEC, eToro has also agreed to cease nearly all cryptocurrency trading and exchanges for U.S. customers. Going forward, U.S. users will only be able to trade Bitcoin (BTC), Bitcoin Cash (BCH), and Ethereum (ETH) on the platform.
Following the order issued on September 12, the trading platform has 187 days to dispose of all remaining cryptocurrencies and liquidate existing assets. Customers will receive proceeds equal to their balance.
The SEC’s complaint alleged that eToro had been operating as an unlicensed broker-dealer and clearing agency since at least 2020. While the exchange reached a settlement with the SEC, it declined to admit or deny the SEC’s allegations. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said eToro’s cooperation provides a path for other cryptocurrency intermediaries to comply with U.S. rules.
By removing tokens offered as investment contracts from its platform, eToro has chosen to comply with and operate within our established regulatory framework… The $1.5 million penalty reflects eToro’s agreement to cease and desist from violating applicable federal securities laws as it continues its operations in the United States.
Gurbi S. Grewal, Director of the SEC’s Division of Enforcement
While the platform refrained from discussing the security status of cryptocurrencies, the settlement could serve as a precedent in future cases. Separating BTC, BCH, and ETH from other cryptocurrencies suggests that the SEC considers most, if not all, other digital assets to be securities.
eToro’s past decisions reinforce this view among some service providers. In 2020, when the SEC sued Ripple, eToro delisted (XRP) and three other cryptocurrencies in response. Still, the company’s crypto services have continued in other markets. As reported, the company has obtained CASP approval from CySEC to offer digital asset services in all EU countries.
Meanwhile, the SEC and other U.S. regulators have continued their sweeping crackdown on the booming blockchain industry. SEC fines on crypto entities have topped $7.4 billion since 2013.
