EToro Settles With the SEC: Industry Lawyers React

Etoro, headquartered in Israel, isn’t a dominant force in the U.S. cryptocurrency market. It has significantly fewer customer accounts – around 240,000 – compared to Coinbase’s staggering 100 million. However, an agreement with the SEC holds importance as it provides valuable insights into how this regulator perceives a crucial legal issue: determining which digital assets are not considered securities and thus fall outside its jurisdiction. According to lawyers consulted by CoinDesk, this is significant.

Below is a sampling of reactions from leading digital asset-focused attorneys:

Drew Hinkes, Partner with K&L Gates:

Joshua Ashley Klayman, U.S. Head of Fintech and Head of Blockchain and Digital Assets at Linklaters:

“What we know from the face of the Cease and Desist Order is that eToro submitted an Offer of Settlement that the SEC accepted. eToro does not admit or deny the findings set forth in the Cease and Desist Letter, except with respect to the SEC’s jurisdiction.

In a court case, it’s crucial to prove allegations; however, in contractual agreements, parties are free to settle as they see fit. Here, we lack specific details about the digital assets that the SEC might have accused of being involved in securities transactions. Additionally, we don’t know the reasons behind eToro’s settlement or its broader business plans and strategies.

In my opinion, just because there’s a Cease and Desist Order doesn’t necessarily mean it will affect any ongoing or future court cases. Essentially, this order didn’t prove any accusations against anyone, and it seems that no specific digital assets were even accused of being securities or part of a securities transaction by the Commission.

Bill Hughes, lawyer at Consensys:

Former SEC lawyer Alexandra Damsker:

“What a disappointment to take the settlement.

“These individuals should take their concerns to court for resolution, as the Securities and Exchange Commission (SEC) does not hold the ultimate authority in this matter, according to the Supreme Court decision Loper.

“But they are just cutting off the business and running off, tail between their legs. Oh well.”

We’ll update this article with more reactions as we receive them.

Important Note: The opinions shared in this article belong solely to the author and may not align with those held by CoinDesk, Inc., its stakeholders, or related entities.