eToro Settles with SEC for $1.5 Million Over Unregistered Crypto Trading Violations

eToro USA LLC has agreed to a $1.5 million settlement with the Securities and Exchange Commission (SEC) for operating an unregistered broker and clearing agency in connection with its crypto trading platform. The SECs investigation revealed that since 2020, eToro allowed U.S. customers to trade crypto assets deemed securities without adhering to federal registration requirements.

In response to the SEC's findings, eToro has agreed to cease violating securities laws and limit the range of cryptocurrencies available for trading on its platform. Moving forward, U.S. customers will only be able to trade Bitcoin, Bitcoin Cash, and Ether. To comply with the SECs mandate, the company will also provide users with 180 days to sell any other crypto assets currently held on the platform. After this period, the affected crypto assets will be liquidated, with the proceeds returned to the respective customers.

The SEC found that eToro had been functioning as both a broker and clearing agency without proper registration, facilitating trades of crypto assets classified as securities. As part of the settlement, eToro has not admitted or denied the SECs findings, but it has agreed to comply with the terms laid out in the cease-and-desist order. This includes the liquidation of non-permitted assets and a penalty of $1.5 million.

eToro will have 187 days from the SEC's order to liquidate any crypto assets it cannot transfer to customers and ensure that proceeds from these sales are returned to users.

This case highlights the growing regulatory scrutiny surrounding the crypto industry and reinforces the SECs stance on enforcing securities laws on platforms offering crypto trading services.