eToro has agreed to pay $1.5 million to settle charges brought by the US Securities and Exchange Commission (SEC). The agency has accused the company of operating as an unregistered broker and clearing agency, and of facilitating trades of certain crypto assets classified as securities.
Under the settlement, eToro will also “cease and desist from violating the applicable federal securities laws.” This will reduce the number of crypto assets available for trading on its US platform.
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eToro to Reduce Crypto Offering
Going forward, U.S. customers will only be able to trade Bitcoin (BTC), Bitcoin Cash (BCH), and Ether (ETH) on eToro’s platform. The company claimed that the restrictions would impact only around 3% of its customers’ cryptocurrency holdings, by dollar value.
The company did not admit or deny the SEC’s findings as part of the settlement. However, the order revealed that eToro had allowed U.S. customers to trade crypto assets classified as securities since at least 2020, without complying with the registration provisions of federal securities laws.
Today we announced that eToro has reached a settlement with the SEC and will cease trading activity in nearly all crypto assets. https://t.co/qxaeNIK75Q pic.twitter.com/f3Xc2mLUsZ
— U.S. Securities and Exchange Commission (@SECGov) September 12, 2024
One notable aspect of the case is the SEC’s omission of specific tokens considered securities in this matter. The regulator has previously named particular tokens in similar cases but has yet to provide a formal definition of which digital assets fall under its jurisdiction.
The eToro case is part of a broader regulatory crackdown on crypto firms that the SEC believes have violated securities laws. Recently, the SEC secured a partial victory in its long-running legal battle against Ripple, a crypto platform, over its sales of XRP to institutional clients.
In that case, Ripple was ordered to pay $125 million in fines, far less than the $2 billion initially sought by the regulator.
In addition, the SEC has launched enforcement actions against major crypto exchanges such as Coinbase and Binance for allegedly intermediating transactions involving unregistered crypto-asset securities.
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SEC Hit Crypto Firms With $4.7B In Enforcement Actions
The SEC has taken a tougher stance against crypto firms in 2024. More specifically, the regulator imposed nearly $4.7 billion in enforcement actions against crypto companies, a 3,018% increase from 2023.
The fines included forfeitures, disgorgement, civil penalties, settlements, and prejudgment interest, calculated from the time the SEC initiated each case.
The surge is largely attributed to the SEC’s $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, marking the regulator’s largest enforcement action to date.
It is worth noting that the regulatory agency has also faced some setbacks. Back in July, the SEC closed its three-year investigation into Hiro Systems. The agency’s conclusion came just a day after it closed a separate case involving stablecoin issuer Paxos.
Prior to that, the SEC also concluded its investigation into stablecoin issuer Paxos without recommending any enforcement action. At the time, Paxos confirmed the closure of the probe regarding its USD-backed stablecoin, formerly known as Binance USD (BUSD).
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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