Based

Test

Leading social trading platform, eToro has been <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-204mr-asic-sues-etoro-in-its-first-design-and-distribution-action-to-protect-consumers-from-high-risk-cfd-products/" rel="noopener noreferrer nofollow">sued</a> by the Australian Securities and Investments Commission (ASIC) over its “high-risk” leveraged derivative contract products. 
Based on the statement made by the regulator, eToro Aus Capital Limited was sued for breaching the “design and distribution obligations and of eToro’s license obligations to act efficiently, honestly, and fairly.”&nbsp;&nbsp; 
<h2 id="b-etoro-users-lose-funds-to-cfd-product-b">eToro Users Lose Funds to CFD Product</h2> 
<a href="https://thecoinrise.com/etoro-review-unleashing-the-power-of-social-trading/" rel="noopener noreferrer nofollow">eToro</a>‘s Contract For Difference (CFD) product is designed to allow users to speculate on the value of certain underlying assets including digital assets, foreign exchange rates, stock market indices, single equities, and commodities. According to ASIC, up to 20,000 eToro users lost their funds to this CFD product between October 5, 2021, and June 14, 2023.&nbsp; 
In response to this analysis, an eToro spokesperson claimed that the company had since amended its CFDs target market determination and is now operating with a revised target market determination in place for CFDs.&nbsp; 
<h2 id="b-etoro-makes-it-difficult-for-users-to-fail-screening-test-b">eToro Makes it Difficult For Users to Fail Screening Test</h2> 
The Austrian regulator accused eToro of not providing sufficient screening tests for customers and investors who intended to participate in the leveraged derivative contracts. 
Users could alter their responses without any restrictions whatsoever. Also, anytime a user chooses an answer that could result in them failing, the system sends a notification to inform the user. Plus the CFDs were&nbsp;“high-risk and volatile”&nbsp;and this not excluded unsuitable traders from trading the product.&nbsp; 
“eToro’s screening test was very difficult to fail and of no real use in excluding customers for who the CFD product was not likely to be appropriate.” 
<h2 id="b-asic-charges-etoro-to-court-b">ASIC Charges eToro to Court</h2> 
Speaking of the risky nature of eToro’s CFD product, ASIC explained that it became heightened where the underlying assets also have their risks. One such asset is crypto which is usually considered an “extremely high-risk and volatile product.” 
Notably, ASIC has begun Federal Court proceedings on eToro’s CFD product for targeting an overly wide market which made it easier for users who had no understanding of CFD trading risks to fall within its target. As such, the regulator is asking for declarations and pecuniary penalties from the court. 
The post <a rel="noopener noreferrer nofollow" href="https://thecoinrise.com/australian-regulator-sues-etoro-over-cfd-product/">Australian Regulator Sues eToro Over CFD Product</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://thecoinrise.com">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

Australian Regulator Sues eToro Over CFD Product

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