eToro USA Settles SEC Charges, Restricts Crypto Asset Offerings

Popular online trading and investing platform eToro USA has reached a settlement with the Securities and Exchange Commission (SEC) and will significantly reduce its crypto asset offerings. The SEC alleged that eToro operated as an unregistered broker and clearing agency by facilitating the trading of certain crypto assets deemed to be securities.

According to the SEC, eToro's platform allowed U.S. customers to trade crypto assets that were offered and sold as securities, without complying with federal securities laws. The SEC's investigation revealed that eToro had been performing these activities since at least 2020.

In response to these allegations, eToro has agreed to pay a $1.5 million penalty. Furthermore, the company will "cease and desist from violating the applicable federal securities laws" and will limit its crypto asset offerings to only a select few. Going forward, U.S. customers will be able to trade only Bitcoin, Bitcoin Cash, and Ether on eToro's platform.

To accommodate this change, eToro will offer a 180-day window for customers to sell their holdings of other crypto assets. The company has also agreed to liquidate any remaining crypto assets that cannot be transferred to customers.

Gurbir Grewal, Director of the SEC's Division of Enforcement, stated: "By removing tokens offered as investment contracts from its platform, eToro has chosen to come into compliance and operate within our established regulatory framework. This resolution not only enhances investor protection but also offers a pathway for other crypto intermediaries."

eToro agreed to the settlement terms without admitting or denying the SEC's findings. The company will continue to operate under the new guidelines as it works to comply with federal securities regulations.