The Australian Securities and Investments Commission (ASIC) filed a lawsuit against the trading platform eToro, alleging that its contract for difference (CFD) product could harm investors. That type of monetary tool is a leveraged derivative contract that enables customers to speculate on the prices of equities, commodities, stock market indices, and digital assets. 

The platform was among the first in its field to hop on the cryptocurrency bandwagon, allowing trading services with Bitcoin (BTC) in 2013 via CFDs. It later added support to Ethereum (ETH), Cardano (ADA), Bitcoin Cash (BCH), Litecoin (LTC), and others.

ASIC’s Concerns

The Australian watchdog announced that it had commenced proceedings in the Federal Court against eToro, arguing its CFD product might not have been tested properly before being introduced to users:

“The case focuses on the appropriateness of eToro’s target market and the screening test used by eToro to assess whether a retail client fell within the target market for the CFD product.”

The ASIC went further, claiming that the financial product is highly dangerous and volatile, adding that the initial trial was “wholly inadequate to assess whether a retail client was likely to be within the target market.”

“ASIC considers that eToro’s conduct is likely to have resulted in a significant number of retail clients being exposed to the CFD product that was unlikely to be consistent with their investment objectives, financial situation, and needs, resulting in a significant risk of consumer harm,” the regulator assumed.

According to the ASIC’s estimations, approximately 20,000 eToro cust