Terra

<ul class="list-ic vertical"> 
 <li> 1 <a>Crypto trading platform eToro finds itself in trouble in Australia due to its loopholes in the offerings and eligibility criteria.&nbsp;</a> </li> 
 <li> 2 <a>The allegation also highlights the loss of significant capital by investors between October 2021 to June 2023.</a> </li> 
</ul> 
Crypto trading provider platform eToro is likely to face struggles in Australia. The country’s financial regulator charges the financial services company for inefficacies in the offerings and eligibility procedures. 
The Australian Securities and Investments Commission (ASIC) stated in a press release about pressing charges against eToro for its beyond-the-limit offering of contract for difference (CFD). The platform was accused of irresponsible take for the screening tests of retail investors prior to offering leveraged derivative contracts.&nbsp; 
According to the ASIC, the CFD product from eToro targets an extensive market that breaks the set pattern and rules for distribution. Several specific assets in the cryptocurrency CFDs on the platform offer even 2x leverage.&nbsp; 
<h2 class="wp-block-heading" id="strong-etoro-removed-the-guardrails-to-eliminate-the-unfits-strong">eToro Removed the Guardrails to Eliminate the Unfits</h2> 
In addition to the irregularities, the target market screening test on the platform was not efficient as it failed to eliminate the users not suitable for trading the product. The regulator noted that the screening test that eToro used to conduct was “very difficult to fail.”&nbsp; 
The insufficiency makes even the people with less or no knowledge opt for the offerings and burn their hands.&nbsp; 
As per the Australian regulator’s allegation, about 20,000 clients over eToro’s platform faced a loss in their capital while trading CFDs between October 2021 to June 2023. &nbsp; 
These contracts for difference or CFDs fall under the category of leveraged derivatives contracts where buyers can take a wager on possible price movements of underlying assets. This could include <a href="https://www.thecoinrepublic.com/2023/02/01/defi-to-target-7-trillion-global-foreign-exchange-market/" target="_blank" rel="noopener noreferrer nofollow">foreign exchange (ForEx) </a>rates, stocks, currencies, commodities, precious metals, and even cryptocurrencies.&nbsp; 
eToro is alleged to offer the aforementioned wide list of products in CFD.&nbsp; 
The risks associated with the CFD product offerings increased considering the cryptocurrencies-like high-risk and volatile products as underlying assets, the regulator noted in the court filing.&nbsp; 
<h2 class="wp-block-heading" id="strong-ramped-up-scrutiny-aftereffect-of-past-mishaps-strong">Ramped Up Scrutiny; Aftereffect of Past Mishaps</h2> 
Given the failure of major cryptocurrency entities in the past year, the already existing skepticism around the burgeoning asset class increased. The volatility, fraudster activities, and hacking of cryptocurrencies were attracting regulatory concerns around the world which grew tremendously since last year.&nbsp; 
During 2022, the broader cryptocurrency industry saw the fall of many prominent crypto projects and firms which were once marching the victory flag. The explosion of the Terra (LUNA) network following the de-pegging of Terra USD (UST) stablecoin made billions of USD disappear from the market within days.&nbsp; 
The ripple effect followed after the mishap lured more major entities like crypto hedge fund Three Arrows Capital (3AC), crypto lender Celsius, Voyager, BlockFi, etc. At the year-end, the crypto market took a major hit with the bankruptcy filing of FTX.&nbsp;

Australian Regulator Sues eToro; Questions CFD Offerings

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Thecoinrepublic.com

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