The Australian Securities and Investment Commission, ASIC, announced that it has launched an investigation into trading platform eToro, which has a close relationship with the cryptocurrency industry. ASIC, in a statement hours ago, claimed that it did not perform the necessary tests for the derivative CFD products offered by eToro.
ASIC is suing eToro for allegedly breaching design and distribution obligations and their licence obligations to act efficiently, honestly and fairly #CFD
— ASIC Media (@asicmedia) August 2, 2023
The country’s financial regulator went to the Federal Court on the grounds that eToro violated many rules in order to reach large audiences in CFD services. ASIC does not want derivatives exported by its trading platform to reach unsuitable customer bases. Authorities made the following statements in the document they shared:
“eToro’s screening tests are pretty poor. We take action as CFD products reach unsuitable customer bases. In the tests conducted on the application to measure the risk perception of the customers, the answers can be changed later.”
ASIC emphasized that the risks of derivatives offered by the eToro platform increase even more when it comes to cryptocurrencies. The government agency referred to cryptoassets as “highly risky and volatile products” in the document.
What is CFD?
CFD products, which are used by investors in many parts of the world, imitate the price of a financial asset. Counterfeit assets can be commodities, stock market indices or cryptocurrencies. Thanks to such derivative instruments, investors can make transactions without incurring asset risk.
Famous trading platform eToro offers its customers up to 2x leverage for crypto CFD products.
