International brokerage platform eToro will pay $1.5 million to settle SEC charges that it failed to register as a broker when operating its crypto trading platform in the US.
It also agreed that Bitcoin, Bitcoin Cash and Ether would be the only crypto assets that US customers could trade on the platform.
The ruling allows eToro to continue operating in the US within the confines of securities laws by “removing tokens offered as investment contracts from its platform,” said SEC Enforcement Division Director Gurbir S. Grewal. around the settlement.
“This resolution not only increases investor protection, but also provides an avenue for other crypto intermediaries,” Grewal said.
The platform operated in more than 140 countries and had more than 10 million registered users before opening to US customers with multi-asset trading starting in 2020 (albeit only with crypto assets). At first, the firm allowed trading of 13 crypto assets, allowing multiple crypto assets through its secure wallet. Its US headquarters is in Hoboken, NJ
According to the commission settlement order, eToro has operated as a broker and clearing agency since 2020, allowing clients to trade crypto assets offered and sold as securities. According to the SEC, the platform had about 240,000 US customers with funded accounts as of December 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 clients. According to the commission, eToro acted as an “intermediary” in making payments and remittances in connection with customers' crypto-asset securities transactions. It was also responsible for customer custody of crypto-asset securities purchased through its trading platform.
US users can continue to trade and invest in stocks, ETFs and options, along with the three most important crypto assets, according to eToro co-founder and CEO Yoni Assia (outside the US, 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 in the UK and Europe and we believe we will see similar in the US in the near future,” said Assia. “Once this is in place, we will look to enable trading of 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 US 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 cannot transfer to clients and return the proceeds.
The SEC is currently involved in several crypto enforcement battles, including a case against Coinbasewhich is located in begin this month in federal court. According to Reuters, a federal judge ruled last week than a group complaint against Coinbase in connection with its SEC investigations may continue.