Australian Regulator Sues eToro Over High-Risk Product

The Australian Securities and Investments Commission (ASIC) filed a lawsuit against the eToro platform over claims about its CFD lineup, which allow speculation, including on cryptocurrencies.

Regulator said that eToro Aus Capital breached its obligations to develop and distribute the instrument. In particular, the regulator described the product’s target market as “too broad”. ASIC also noted that there were no difficulties in passing the screening test, which does not exclude users for whom CFDs may not be suitable.

“If a retail client had moderate risk tolerance, but was not an experienced investor and did not understand the risks of trading the instrument, he would still fall within the target market,” the statement said.

The proceedings cover the period from 5 October 2021 to 29 July 2023. They said that eToro AUS is now operating with a revised target market definition for CFDs, they added.

In April 2023 ASIC revoked the license of Binance Australia Derivatives. By 21 April its users were required to close all derivative positions.

In June 2023, eToro halted the purchase and sale of Algorand, Decentraland, Polygon and Dash for US clients, as the SEC classified them as securities.