eToro to Halt Most Crypto Trading After $1.5M SEC Settlement

In the coming six months, the U.S. division of the financial services firm eToro will halt trading for nearly all cryptocurrency assets on its platform due to a recent ruling from the Securities and Exchange Commission (SEC).

As stated in a press release from the SEC, eToro has been in violation of federal securities laws since at least 2020. Consequently, the exchange will be fined $1.5 million and will only offer a select range of cryptocurrencies for trading.

SEC Announces Settlement With eToro

The SEC has charged eToro with acting as an unregistered broker and clearing agency, enabling the trading of crypto assets as securities on its online platform. Although the exchange provided these services, it did not meet the registration requirements outlined in the federal securities laws.

Under the terms of the settlement, eToro has agreed to halt any infractions of federal securities laws moving forward. From now on, the exchange will exclusively provide access to Bitcoin (BTC), Bitcoin Cash (BCH), and Ether (ETH) for its users.

Following the SEC’s mandate, eToro users now have just 180 days to sell off any other assets that will be removed from the platform; otherwise, the exchange will liquidate those cryptocurrencies and return the proceeds to the users. The SEC indicated that while the online trading platform neither admitted nor denied the accusations, it has acquiesced to the terms of the settlement.

“By eliminating tokens that are categorized as investment contracts from its platform, eToro has opted to comply and function within our existing regulatory framework. This resolution not only bolsters investor protection but also paves the way for other crypto intermediaries. The $1.5 million penalty signifies eToro’s commitment to stopping violations of federal securities laws as it pursues its U.S. operations,” stated Gurbir Grewal, Director of the SEC’s Division of Enforcement.

More Regulatory Issues

Over recent years, eToro has made efforts to adhere to SEC regulations. In June 2023, the platform placed restrictions on several cryptocurrencies deemed securities as part of the agency’s lawsuits against competing trading platforms Coinbase and Binance.

The restricted assets include Algorand (ALGO), Decentraland (MANA), Dash (DASH), and Polygon (MATIC). Notably, the company had already removed Ripple (XRP), Cardano (ADA), and Tron (TRX) for various reasons in the preceding months.

Additionally, eToro is not only contending with regulatory pressures from the SEC; last month, the Australian Securities and Investments Commission initiated a lawsuit against the platform for causing harm to investors through its products.