EToro's European traders say they have suffered damage as a result of the broker's latest measures regarding leveraged crypto positions, which were abruptly closed in the face of what the trading platform called "extreme market volatility".
Dozens of European eToro users hurt by sudden closure of crypto positions
Retail investors in the UK and the US are prohibited from purchasing crypto derivatives, including financial contracts that allow for margin trading where investors only have to pay a small amount of the notional gain of the contract.
To customers of eToro in the European countries that allow such trading of contracts for difference (CFD), however, it was communicated by e-mail on the evening of Friday 8 January: "If you do not increase the margin to 100%, the position will be closed at 21: 00 GMT today. "
The notice also included an explanation that customers with available balance could keep open positions by adding funds, while those with no available balance could decide to close other positions to free up funds.
However, traders unhappy with the initiative vented on Twitter stating that four hours after the announcement, eToro closed all leveraged positions on cryptocurrencies, including those that users had attempted to keep open, thus violating the deal with the its users.
Amy Butler, eToro's global PR manager, said the vast majority of eToro's clients were unaffected by the changes. “We know there are several dozen frustrated customers and we are working hard to fix their problems,” Butler said.
The impact on eToro of the cryptocurrency rally
Last week, eToro, which is said to be planning a $ 5 billion public listing, took a further step by increasing the required deposit level from $ 200 to $ 1.000 in order to better manage the overwhelming demand from hopeful traders. cryptocurrencies attracted by skyrocketing prices.
The temporary decision to raise deposit minimums is due to increased demand, Butler said. As for the removal of cryptocurrency in Europe, this decision was made "from an internal risk management perspective," Butler said, adding that it was not related to potential IPO plans.
“EToro clients will receive their funds. If eToro does not reimburse them, the State of Cyprus will, ”said Jurij Toplak, professor of law at the European Alma Mater in Slovenia and added to the Fordham law of New York.
Toplak said the offended eToro clients he represents will take action to the Cyprus Securities and Exchange Commission in an attempt to revoke eToro's license. “I imagine that, with the disproportionate growth of cryptocurrencies, eToro has found that they are unable to pay customers that much money,” Toplak said in an interview. "And then they just canceled the contracts."
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