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The only crypto assets U.S. customers will be able to trade on the company’s platform are bitcoin, bitcoin cash and ether.
Trading platform eToro agreed to pay $1.5 million to settle charges it operated an unregistered broker, an unregistered clearing agency and facilitated trading certain crypto assets as securities, the U.S. Securities and Exchange Commission said in a statement on Thursday.
"eToro has agreed to cease and desist from violating the applicable federal securities laws and will make only a limited set of crypto assets available for trading," the statement said.
Going forward the only crypto assets available for U.S. customers to trade on the company’s platform will be bitcoin (BTC), bitcoin cash (BCH) and ether (ETH).
The SEC’s order found that since at least 2020, eToro let U.S. customers trade crypto assets being offered and sold as securities and "did not comply with the registration provisions of the federal securities laws," the release said.
The eToro case notably doesn't specify what tokens the company was handling that it considers securities. The agency has done so in several past matters, but it hasn't offered a formal, crypto-specific definition for what tokens stray into the SEC's jurisdiction – the primary point of legal contention between the regulator and the industry.
The SEC has been clamping down on crypto firms that it argues have violated securities laws. It recently was granted an incremental win in its several years long case against crypto platform Ripple that dates back to 2020.
In August, a federal judge ruled that Ripple should pay $125 million after finding that the company violated federal securities laws with its direct sales of XRP to institutional clients. But this was a fraction of the $2 billion that the SEC initially sought.
The SEC also brought an enforcement action against crypto exchange Coinbase for "alleging that Coinbase intermediated transactions in crypto-asset securities on its trading platform and through related services, all in violation of the federal securities laws." The court sided with the SEC, according to a filing in March.
In 2023 the SEC also sued another large exchange, Binance, for violating securities laws, and the decision led to Changpeng "CZ" Zhao stepping down after pleading guilty to criminal charges and Richard Teng replacing him.
ETH remains a point of dispute, with the Commodity Futures Trading Commission and most of the crypto industry arguing it's a commodity while the SEC declines to say either way, though at least one SEC-registered broker dealer has begun a custody operation that treats it as a security.
Jesse Hamilton contributed to reporting.
Update (September 12 15:07 UTC): Adds context on SEC in last five pars.
Edited by Sheldon Reback and Jesse Hamilton.
Source: Camomile Shumba – coindesk.com