ChainCatcher reported that the Australian Securities and Investments Commission (ASIC) filed a lawsuit against the multi-asset investment platform eToro for providing contracts for difference (CFD) products to retail investors on the grounds that its market positioning was too broad and violated the design and distribution rules.
ASIC stated: "The CFDs offered by eToro were high-risk and volatile, and the platform's target market screening test did not properly exclude unsuitable customers from trading the product; between October 5, 2021 and June 14, 2023, nearly 20,000 eToro customers lost money in CFD trading."
CFDs are leveraged derivative contracts that allow buyers to speculate on price movements of underlying assets, such as foreign exchange rates, stock market indices, single stocks, commodities or cryptocurrencies. eToro’s cryptocurrency CFDs allow up to two times leverage on some assets, while others involve stocks, currencies, commodities and precious metals.