Under its chair, Gary Gensler, the SEC is taking massive action against crypto companies in the U.S. The regulator believes that most coins and tokens qualify as securities, and therefore, the issuers and exchanges need appropriate registration. The U.S. subsidiary of the Israeli eToro broker scheme has also been sued for this reason. eToro settled with the SEC with a $1.5 million payment.
Key Points:
- eToro USA LLC to pay $1.5 million to settle SEC charges for operating an unregistered broker and clearing agency.
- Going forward, eToro will only offer Bitcoin, Bitcoin Cash, and Ether for U.S. customers.
- The firm has 180 days to allow customers to sell other crypto assets no longer available for trading.
Short Narrative:
The SEC has announced that eToro USA LLC will pay a $1.5 million penalty for operating as an unregistered broker and clearing agency on its crypto trading platform. Since at least 2020, eToro allowed U.S. customers to trade crypto assets that were considered securities without complying with federal registration requirements. As part of the settlement, eToro will limit its U.S. trading offerings to Bitcoin, Bitcoin Cash, and Ether, giving customers 180 days to sell other assets.
Actionable Insight:
Crypto trading platforms must ensure compliance with federal securities laws, especially when offering assets classified as securities. Platforms like eToro are now facing stricter regulatory scrutiny, signaling a shift towards more stringent enforcement.
In the US in particular, the rules for crypto are unclear. Although the SEC insists that the decades-old Howey Test and the established securities law also apply to the crypto sector, the US crypto scene sees things differently. Providers of crypto financial instruments should be very careful in the US.
Call for Information:
FinTelegram encourages any whistleblowers or individuals with insight into unregistered crypto platforms to come forward and report additional compliance issues.
