Australia’s Regulator Takes Legal Action Against eToro

Australia’s financial regulator has taken legal action against eToro, the trading platform, for offering “high-risk” leveraged derivative contract products that enable users to speculate on various assets, including cryptocurrencies.

The Australian Securities and Investments Commission (ASIC) accused eToro Aus Capital Ltd. of violating design and distribution obligations related to its contract for difference (CFD) product.

This CFD product allows clients to speculate on changes in the value of underlying assets like forex rates, stock market indices, equities, commodities, and cryptocurrencies.

ASIC’s investigation revealed that approximately 20,000 eToro users lost money trading CFDs between October 5, 2021, and June 14, 2023.

They pointed out that eToro’s website states that 77% of retail investor accounts lose money when trading CFDs with them.

As a result, ASIC is seeking declarations and pecuniary penalties from the court. Meanwhile, eToro is evaluating the allegations and confirmed that there is no impact or disruption of service for their clients in Australia.