The eToro trading platform suddenly stopped leveraged trading in European countries due to “extreme market volatility”.
On January 8, eToro’s clients in European countries where CFDs are allowed to trade received an email from the company. It stated that if traders did not increase their margin to 100%, then their positions would be closed at 21:00 GMT. Clients with an available balance can keep positions open by adding funds, while clients with no available balance can close other positions to free up funds.
However, later, messages from disgruntled traders began to appear on the social network Twitter that all positions on leveraged cryptocurrencies were closed on the site – even those that users tried to leave open. Slovenian lawyer Slavko Vesenjak, who represents several clients of eToro, said that by doing this, the site violated the agreement with its clients.
eToro sent a notice to traders just four hours before closing all leveraged cryptocurrency positions. Considering that the European clients of the site live in different time zones, they could not take the necessary actions in a timely manner and were faced with the fact that their positions were already closed. Amy Butler, head of public relations at eToro, said that the vast majority of clients were not affected by such changes.
The platform’s specialists are making every effort to solve the problem that has affected several dozen users. In addition, last week eToro raised the minimum deposit from $ 200 to $ 1,000. Butler said the temporary decision to increase the deposit amount was driven by a surge in demand for leveraged trading. The decision to close such services in Europe was made in order to reduce internal risks.
Butler added that this has nothing to do with the initial public offering (IPO) that eToro is planning to conduct. Jurij Toplak, a law professor at Alma Mater Europaea University in Slovenia and an assistant lawyer at Fordham Law in New York, is confident that eToro’s clients will receive their funds.
If eToro does not return the money, then the affected clients of the site can contact the Cyprus Securities and Exchange Commission (SEC) with a request to revoke the license from eToro and return the lost funds. Due to the growth of the cryptocurrency market, eToro found that the platform was unable to pay out large sums of money to customers, Toplak said, so it simply terminated the contracts with the users.
As a reminder, six months ago, eToro announced its intention to issue cryptocurrency debit cards in the UK. In addition, in 2019, the company launched a cryptocurrency exchange regulated by the Gibraltar Financial Services Commission, as well as eight of its own stablecoins.
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