ASIC Files Lawsuit Against eToro Over CFD Offerings
- The CFDs available on the eToro platform are leveraged derivatives.
- The regulator also said that the platform did not have an adequate screening process.
The Australian Securities and Investments Commission (ASIC) has launched a lawsuit against eToro, a stock and crypto trading platform. This is over allegedly allowing its users to engage in “high risk” leverage derivative products, specifically CFDs.
On Thursday, August 3rd, ASIC released a statement claiming that eToro Aus Capital Ltd. had failed to meet distribution and design requirements for their CFD product. The CFDs (Contracts for Difference) available on the eToro platform are leveraged derivatives.
No Adequate Screening Process
Foreign exchange rates, stock market indexes, single stocks, commodities, and cryptocurrencies are just some of the assets on which purchasers may speculate using contracts for difference (CFDs).
When providing leveraged derivative contracts to ordinary investors, the trading platform allegedly did not conduct enough screening. “High risk and volatile” is how ASIC described eToro’s CFDs. The regulator also said that the platform did not have an adequate screening process in place. In order to keep out consumers who shouldn’t be using the trading product.
In addition, ASIC stated:
“eToro’s screening test was very difficult to fail and of no real use in excluding customers for who the CFD product was not likely to be appropriate. For example, clients could amend their answers without limitation and clients were prompted if they selected answers which could result in them failing.”
The regulator has also claimed that eToro’s products were aimed at “far too broad” of an audience, with some users having a limited grasp of the dangers associated with CFD trading. On the other hand, after four tokens were identified as securities in litigation filed by the U.S SEC, eToro suspended trading in these tokens in the United States.
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Read more: https://thenewscrypto.com/exchange-news-asic-files-lawsuit-against-etoro-over-cfd-offerings/
Text source: TheNewsCrypto – Blockchain & Cryptocurrency News M
