The international brokerage platform eToro will pay $1.5 million to settle SEC charges it didn’t register as a broker when operating its U.S. crypto trading platform.
It also agreed that Bitcoin, Bitcoin Cash, and Ether would be the only crypto assets U.S. customers could trade on the platform.
The penalty allows eToro to continue operating in the U.S. within the boundaries of securities laws by “removing tokens offered as investment contracts from its platform,” SEC Enforcement Division Director Gurbir S. Grewal said about the settlement.
“This resolution not only enhances investor protection but also offers a pathway for other crypto intermediaries,” Grewal said.
The platform operated in more than 140 countries and had more than 10 million registered users before it opened to U.S. customers with multi-asset trading starting in 2020 (though only with crypto assets). At the outset, the firm allowed trading of 13 crypt assets, allowing numerous crypto assets via its secure wallet. Its U.S. headquarters are in Hoboken, N.J.
According to the commission’s settlement order, eToro has operated as a broker and clearing agency since 2020, allowing customers to trade crypto assets offered and sold as securities. According to the SEC, the platform had about 240,000 U.S. customers with funded accounts as of Dec. 2023.
The SEC alleged that eToro never registered with the commission as a broker or clearing agency despite acting in both roles for its crypto-trading customers. According to the commission, eToro acted as an “intermediary” in making payments and deliveries concerning customers’ crypto asset securities transactions. It was also responsible for custody of crypto asset securities customers purchased through its trading platform.
U.S. users can continue to trade in and invest in stocks, ETFs and options, along with the three most considerable crypto assets, according to eToro co-founder and CEO Yoni Assia (outside the U.S., customers can continue to access more than 100 crypto assets.)
“We appreciate the importance of regulation to protect consumers. We now have a clear regulatory framework for crypto assets in our home markets of the UK and Europe, and we believe we will see similar in the U.S. in the near future,” Assia said. “Once this is in place, we will look to enable trading in the crypto assets that meet this framework.”
In addition to the penalty, eToro will only provide customers with the functionality to sell crypto assets other than Bitcoin, Bitcoin Cash or Ether for 180 days after today’s settlement; according to an eToro spokesperson, this represents less than 3% of the total dollar value of U.S. customers’ crypto assets.
According to the commission, within 187 days, the firm pledged to liquidate any crypto assets offered or sold as securities that eToro can’t transfer to customers and return the proceeds.
The SEC is currently involved in several crypto enforcement struggles, including a case against Coinbase, which is set to commence this month in federal court. According to Reuters, a federal judge ruled last week that a class action complaint against Coinbase related to its SEC investigations can proceed.
