eToro Agrees to Pay $1.5 Million Fine to Regulators for Failing to Register as a Broker-Dealer and Clearing Agency

eToro Agrees to Pay $1.5 Million Fine to Regulators for Failing to Register as a Broker-Dealer and Clearing Agency

The U.S. Securities and Exchange Commission (SEC) announced on its official website that it has reached a settlement with eToro, a mobile investment app facilitating cryptocurrency trading, leading to eToro paying a $1.5 million fine. The SEC found eToro to be in violation of federal securities laws by failing to register as a broker-dealer and as a clearing agency while offering trading of crypto asset securities to U.S. customers. According to the SEC's order, eToro violated the Securities Exchange Act of 1934 by failing to register as a broker-dealer. As a result, it could not maintain the required minimum net capital and failed to provide customers with proper disclosures about its business. The SEC also found that eToro violated the Securities Exchange Act of 1934 by failing to register as a clearing agency. As a result, it failed to have the necessary safeguards in place to protect customer assets and ensure the orderly functioning of the market. The SEC’s order finds that eToro has violated the anti-fraud provisions of the federal securities laws, the broker-dealer registration provisions of the Securities Exchange Act of 1934, and the clearing agency registration provisions of the Securities Exchange Act of 1934. Without admitting or denying the SEC’s findings, eToro agreed to pay a $1.5 million penalty. It also agreed to cease and desist from any further violations of the federal securities laws.