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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 an agreement revealed The SEC also agreed to suspend almost all cryptocurrency trading and operations for US customers. From now on, US 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 venue has 187 days to withdraw all other cryptocurrencies and liquidate existing assets. Clients will receive profits equal to their balance.
The SEC complaint alleged that eToro had been operating as an unlicensed broker-dealer and clearing agency since at least 2020. While the exchange settled with the SEC, it declined to admit or deny the SEC’s allegations. Gurbir S. Grewal, director of the SEC’s enforcement division, said eToro’s cooperation provides an avenue 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 fine reflects eToro's agreement to cease violating applicable federal securities laws while continuing its operations in the U.S.
Gurbi S. Grewal, Director of the SEC's Division of Enforcement
While the platform refrained from discussing the security status of cryptocurrencies, the settlement may be used as a precedent in future cases. Separating btc, BCH, and eth from other cryptocurrencies suggests that the SEC views most, if not all, other digital assets as securities.
eToro’s previous 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 firm’s cryptocurrency services continued in other markets. As reported, the firm obtained a CASP approval from CySEC to offer digital asset services in all EU countries.
Meanwhile, the SEC and other US regulators continued a sweeping crackdown on the burgeoning blockchain sector. SEC fines against crypto entities have exceeded $7.4 billion since 2013.
