eToro sued by Australian regulator over alleged breaches
- eToro’s Australian entity, eToro Aus Capital Limited, is being sued by Australia’s Securities and Investments Commission (ASIC) for alleged breaches of regulations.
- The allegations are related to eToro’s contract for difference (CFD) product, which allows clients to speculate on the change in value of underlying assets like crypto.
- Around 20,000 of eToro’s clients reportedly lost money trading CFDs between October 2021 and June 2023.
- ASIC claims that eToro’s target market was too broad and that its screening test was difficult to fail, allowing inexperienced investors to participate.
- The regulator is seeking monetary penalties, and eToro AUS is reviewing the allegations and will respond accordingly.
Hot Take: The lawsuit against eToro highlights the increasing regulatory scrutiny faced by crypto firms in Australia. The allegations of targeting inexperienced investors and inadequate risk screening raise concerns about investor protection and the need for stricter regulations in the industry.
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