eToro Settles with SEC for $1.5M Over Crypto Trading Charges

As a seasoned analyst with decades of experience in the financial industry, I find this settlement between the SEC and eToro USA LLC to be a pivotal moment in the regulation of the cryptocurrency market. The fact that a prominent player like eToro found itself on the wrong side of federal securities laws serves as a stark reminder that compliance is paramount, regardless of the innovative nature of the asset or platform.


The U.S. Securities and Exchange Commission (SEC) has settled with eToro USA LLC, imposing a $1.5 million penalty for operating as an unregistered broker and clearing agency. 

This action arises because eToro did not meet the necessary federal registration standards when they enabled the trade of cryptocurrencies classified as securities. The SEC’s directive signifies a substantial regulatory move in the crypto market, underscoring the importance of adhering to securities laws.

As a researcher, I’ve noticed that since 2020, eToro has enabled its U.S. users to trade several cryptocurrencies on their platform. Unfortunately, it was revealed by the SEC that eToro failed to adhere to federal registration regulations, thereby breaching securities laws.

In line with the agreement reached, eToro will now only allow U.S. users to trade in Bitcoin, Bitcoin Cash, and Ether moving forward. Within a span of 180 days, users can sell off their other cryptocurrency assets before they are taken off the platform. Any cryptocurrencies categorized as securities that cannot be transferred will be liquidated. The returns from this process will be given back to customers within approximately 187 days.

Gurbir S. Grewal, head of the SEC’s Enforcement Division, emphasized that this settlement strengthens investor security and provides a blueprint for other cryptocurrency intermediaries to follow suit. The Securities and Exchange Commission’s investigation, spearheaded by Jon Daniels, Alison Levine, and Tiantong Wen, under the supervision of Mark R. Sylvester and Jorge G. Tenreiro, represents an extensive examination of eToro’s business practices.

eToro has chosen to comply with the stop-and-desist directive, without either confirming or denying the Securities and Exchange Commission’s (SEC) allegations. The settlement serves as a reminder of the significance of following federal securities regulations and works towards ensuring that eToro’s future activities adhere to regulatory guidelines.

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2024-09-12 19:16