The US SEC has never played the financial police so much in the Wild West that is crypto. With its constant reminders of order, it lets nothing pass. The latest victim? eToro, accused of playing the role of unlicensed broker, must drastically reduce its crypto offering for American clients. A look back at a hefty fine and changes imposed on the platform.
SEC Strikes Hard, eToro Bows
Since 2020, the SEC, which is currently investigating OpenSea, has been keeping a watchful eye on eToro and its crypto trading practices in the United States. Verdict? The axe falls: eToro was illegally operating as a broker and clearing agencyall this without any license. A real crypto trading cowboy, one might say!
The SEC's argument: some crypto assets offered by eToro are considered as financial securitiestherefore subject to the regulations in force.
eToro, caught red-handed, had no choice but to bow to the authority of the financial markets policeman. Result? The platform agrees to pay a fine of $1.5 million and commits to drastically reducing the supply of cryptos available to US traders.
- Since 2020, eToro has allowed trading of crypto assets without complying with the law;
- A fine of 1.5 million for violations of securities law;
- Only three cryptos will remain available to US customers: Bitcoin, Bitcoin Cash and Ethereum.
The SEC, with this decision, sends a strong message to other platforms: obey the law or suffer the consequences.
As said Gurbir S. GrewalDirector of the SEC's Division of Enforcement:
” This resolution provides a path for other crypto intermediaries to comply with the established regulatory framework “.
The big clean-up in eToro's crypto offering
The SEC's decision has direct impacts on eToro's crypto offering. Exit the multiple altcoins formerly available to US customers. In the future, only Bitcoin (BTC), Bitcoin Cash (BCH) And Ethereum (ETH) will be offered. A limited choice that risks scaring away some users accustomed to diversity. But what to do in the face of the SEC?
The platform allows its users to sell their other cryptos in a period of 180 days. After this deadline, these assets will be liquidated and the profits returned to the users. This spring cleaning in the middle of autumn illustrates well the SEC's strategy: to clean up the crypto trading markets to bring order to them.
eToro will now have to deal with a much more limited offer in the United StatesA blow for the platform, which has built part of its success on its diversity of assets.
The consequences for the US crypto market remain to be seen, but it is certain that regulation continues to tighten, leaving little room for the reckless. In this atmosphere of fraud hunting, eToro is under close surveillance. With $4.68 billion in fines in 2024, the SEC is playing the hungry wolf and crypto platforms must remain on their guard.
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