EToro reached a $1.5 million settlement with the U.S. Securities and Exchange Commission over alleged violations of federal securities laws.

According to an greement disclosed by the SEC, eToro also agreed to cease nearly all cryptocurrency trading and transactions for U.S. customers. Moving forward, American users can only trade Bitcoin (BTC), Bitcoin Cash (BCH), and Ethereum (ETH) on the platform. 

Following the order issued on Sept. 12, the trading venue has 187 days to offboard all other cryptocurrencies and liquidate existing assets. Customers will receive proceeds equal to their balance.

The SEC’s complaint claimed that eToro operated an unlicensed broker and clearing agency since at least 2020. Although the exchange reached a settlement with the SEC, it declined to admit or deny the SEC’s allegations. Gurbir S. Grewal, director of the SEC’s enforcement division, said eToro’s cooperation provides a pathway for other crypto intermediaries to comply with U.S. rules.

By removing tokens offered as investment contracts from its platform, eToro has chosen to come into compliance and operate within our established regulatory framework… The $1.5 million penalty reflects eToro’s agreement to cease violating applicable federal securities laws as it continues its U.S. operations.

Gurbi S. Grewal, director of the SEC’s enforcement division

While the platform refrained from debating the security status of cryptocurrencies, the settlement may be used as a precedent in future cases. Separating BTC, BCH, and ETH from other cryptocurrencies suggests the SEC views most, if not all, other digital assets as securities.

EToro’s past decisions reinforce this view among some service providers. In 2020, when the SEC sued Ripple, eToro delisted (XRP) and three other cryptocurrencies in response. Still, the company’s crypto services proceeded in other markets. As reported, the firm bagged a CySEC CASP approval to offer digital asset facilities in all EU countries.

Meanwhile, the SEC and other U.S. regulatory watchdogs continued a sweeping crackdown across the burgeoning blockchain sector. SEC fines against crypto entities have exceeded $7.4 billion since 2013.