Social investment site eToro Aus Capital Limited in Australia is being sued by the Securities and Investments Commission (ASIC), Australia’s market regulator, for alleged violations of licencing and distribution requirements. Claims made by the ASIC concern eToro’s contract for difference (CFD) product, a kind of leveraged derivative contract that enables customers to speculate on the price of underlying assets like cryptocurrencies, media reports said.
In recent months, ASIC has been looking into Binance Australia as part of a wider crackdown on cryptocurrency businesses in Australia. Because of frauds and client losses associated with cryptocurrency, major banks in the nation have put some limits on the industry.
According to ASIC’s investigation, over 20,000 eToro consumers lost money between October 2021 and June 2023 because the company targeted a too-wide audience for CFDs and used an insufficiently stringent screening process. Customers with a medium risk tolerance and little financial expertise were also included in eToro’s target market, as reported by ASIC.
In response to ASIC’s charges, eToro AUS said it was reviewing the details and would provide further comment once it had done so. Assuring its customers that there would be no interruptions to service or major effects on its worldwide operations, the firm has issued a statement to this effect. eToro Australia has updated its CFDs target market.
Legal procedures are forthcoming in which ASIC seeks monetary fines. This legal action is part of ASIC’s larger mission to promote integrity and honesty in Australia’s financial industry, including the volatile and ever-changing cryptocurrency market.
