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An Australian financial regulator has sued the eToro crypto trading platform over “volatile” trading products. ASIC Sues eToro&nbsp; 
The Australian Securities and Investment Commission (ASIC) has taken legal action against eToro's crypto trading platform, alleging violations of licensing and distribution regulations. The ASIC's move comes after around 20,000 eToro clients lost money while trading Contract for Difference (CFDs) between October 2022 and June 2023, including 77% of retail investor accounts.&nbsp; 
The CFD product or Contract for Difference is a leveraged derivative contract used by customers to speculate on asset value changes. The ASIC has accused eToro of not acting fairly as required by the design, distribution, and license mandate of the product.&nbsp; ASIC Alleges Shoddy Screening 
ASIC has alleged that the platform’s screening test was not appropriately thorough and, as a result, effectively useless. The commission also claimed that clients could amend their answers however many times they wished, and the platform also prompted the clients to select favorable answers.&nbsp; 
Since the customer base for the CFD product was not defined clearly, it led to retail clients investing in the high-risk product and losing money.&nbsp; 
Consequently, ASIC wants the court to issue declarations and pecuniary penalties against the trading platform. 
ASIC Deputy Chair Sarah Court said, 
“Our message to the industry is that CFD target markets should be narrowly defined given the significant risk that retail clients may lose all of their deposited funds.” Binance In Similar Waters 
The ASIC is deeply concerned about eToro's alleged wrongdoing, especially given the trading platform's extensive market presence and reputation as a prominent brand expected to adhere to local and international laws.&nbsp; 
Another prominent name in the industry, Binance, has faced similar charges from the United States Department of Justice (DOJ). While the ASIC pursues eToro, the DOJ is considering federal charges against Binance. The allegations against the largest crypto exchange also involve fraud, but the stakes are higher due to the potential impact on customers.&nbsp; Legal Action Could Have Consequences 
The DOJ is concerned about a potential run-on effect that could harm Binance customers, similar to what happened with the FTX exchange when its founder, Sam Bankman-Fried, faced legal issues. 
The ASIC's legal action against eToro reflects its strict stance on targeting markets for CFD products. The commission is determined to protect retail investors from significant financial harm. Conversely, the DOJ's approach to Binance is influenced by considerations of customer welfare and potential repercussions on the market. The outcome of Binance's case remains uncertain, pending confirmation from the DOJ. 
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.&nbsp;

eToro Under Legal Fire Down Under

Crypto Daily™

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