The Israeli financial firm, eToro, has recently concluded an agreement with the U.S. Securities and Exchange Commission (SEC), resolving a dispute over offerings of unlisted securities on its platform. eToro will incur a financial penalty of $1.5 million as part of the settlement with the SEC. In addition, the company has agreed to cease the majority of its cryptocurrency services to customers in the United States as a term of the settlement.
The issue originated from eToro providing access to cryptocurrencies on its platform since around 2020, which was not in alignment with federal securities regulations in the United States.
eToro Reaches $1.5 Million Settlement with SEC, Limits Crypto Services
(Photo courtesy of Aaron Davidson/Getty Images for eToro)
A recent press announcement from the Commission details the settlement of a lawsuit with eToro, where the firm has consented to pay a $1.5 million fine. The lawsuit charged eToro with functioning as an unauthorized broker and clearing agency for crypto asset trades in the U.S.
Per the SEC, eToro allowed the trade of securities on its platform without the necessary authorization. Additionally, the SEC pointed out eToro’s consistent disregard for the registration prerequisites stipulated in federal securities laws over several years.
Subsequently, eToro has confirmed it will maintain trading for a limited selection of coins on its platform, in conjunction with the cessation of many of its trading services as part of the settlement terms.
Following the settlement, there will be considerable changes in eToro’s U.S. operations, restricting trades to just three cryptocurrencies: Bitcoin, Bitcoin Cash, and Ether.
eToro has indicated that these particular coins are in line with their regulatory policies.
SEC’s History with Cryptocurrency Firms
The SEC is renowned for its rigorous enforcement of laws and regulation of digital assets in the crypto industry, especially amid the growing adoption and usage of blockchain technology. Just last year, the SEC was involved in a confrontation with the cryptocurrency giant Binance, which resulted in the conviction of its CEO, CZ Zhao, who is currently imprisoned.
Over the years, the SEC has frequently engaged with the cryptocurrency sector, focusing on deceptive operations, unlisted securities, and fraud. The SEC has especially targeted large-scale crypto scams, including last year’s suit against Hex Crypto and its founder, Richard Schueler, for engaging in fraudulent activities.
The SEC continues to concentrate on crypto regulation and pursuing legal cases against significant crypto enterprises like Coinbase.
This encounter with the SEC has led eToro to a substantial settlement and closure of most of its U.S. operations.
