- The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against eToro Aus Capital Limited over its Contract for Difference (CFD) product.
- The lawsuit alleges potential breaches of design and distribution obligations and concerns about eToro’s license obligations related to efficiency, honesty, and fairness.
- ASIC questions the appropriateness of eToro’s chosen target market for its CFD product, considering the high-risk nature of CFD trading and the broad audience it was marketed to.
- The regulatory agency claims eToro’s screening procedure was insufficient in determining whether retail clients were suitable for the high-risk trading operation.
- ASIC highlights the period between October 5, 2021, and June 14, 2023, during which over 20,000 eToro clients allegedly lost money trading CFDs.
- eToro’s website states that 77% of retail investor accounts lose money when trading CFDs on the platform, emphasizing the dangers of CFD trading.
- In response to the alleged violations, ASIC seeks declarations and pecuniary penalties from the Court, with the case management hearing date yet to be set.
- Australia has been intensifying regulatory scrutiny on crypto firms, conducting crackdowns on crypto entities and major banks imposing partial restrictions on crypto-related activities.
- Notable events include the search conducted at the offices of Binance Australia and the cancellation of FTX Australia’s license by ASIC.
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