eToro to Shut Down Nearly All Cryptocurrency Exchanges in Settlement with US SEC

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Opalesque Industry Update – The Securities and Exchange Commission announced that eToro USA LLC has agreed to pay $1.5 million to settle charges that it operated an unregistered broker-dealer and an unregistered clearing agency in connection with its trading platform that facilitated the buying and selling of certain crypto assets as securities.

eToro has agreed to cease and desist from violating applicable federal securities laws and will only make a limited set of crypto assets available for trading.

The SEC’s order finds that, since at least 2020, eToro operated as a broker-dealer and clearing agency by offering U.S. customers the ability, through eToro’s online trading platform, to trade crypto assets offered and sold as securities, but eToro failed to comply with the registration requirements of the federal securities laws.

eToro has publicly announced that, going forward and subject to the provisions of the SEC’s order on the matter, the only crypto assets that U.S. customers will be able to trade on the company’s platform will be Bitcoin, Bitcoin Cash, and Ether. eToro has publicly announced that it will provide its customers with the functionality to sell all other crypto assets for only 180 days following the issuance of the SEC’s order.

“By removing tokens offered as investment contracts from its platform, eToro has chosen to comply and operate within the established regulatory framework. This resolution not only strengthens investor protections, but also provides a path forward for other crypto intermediaries,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “The $1.5 million penalty reflects eToro’s agreement to cease and desist from violating applicable federal securities laws as it continues its operations in the United States.”

Without admitting or denying the SEC’s findings, eToro has agreed to submit to a cease and desist order, pay a $1.5 million penalty, and, within 187 days of the order, liquidate all crypto assets offered and sold as securities that eToro is unable to transfer to its customers, and return the proceeds to the respective customers.

The SEC investigation was conducted by Jon Daniels, Alison Levine, and Tiantong Wen, with assistance from Samuel Wasserman, Ben Kuruvilla, and Lisa Knoop. The case was overseen by Mark R. Sylvester and Jorge G. Tenreiro of the Crypto Assets and Cyber ​​Unit.