European eToro Traders Call Foul Over Closure of Leveraged Crypto Contracts

Traders in Europe are threatening legal action against eToro for allegedly closing their leveraged crypto positions without enough notice.

AccessTimeIconJan 10, 2021 at 8:22 p.m. UTC
Updated May 9, 2023 at 3:14 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

European users of eToro are claiming they were given the bum’s rush regarding leveraged crypto positions, which have been abruptly closed in the face of what the trading platform called “extreme market volatility.”

Retail investors in the U.K. and U.S. are barred from buying into crypto derivatives, including financial contracts that allow margin trading where investors need only put up a small amount of the contract’s notional payoff. 

  • How NEAR Enables Multichain Access From One Account
    00:56
    How NEAR Enables Multichain Access From One Account
  • Why the NEAR foundation Chose Eigenlayer as a Security Partner
    00:54
    Why the NEAR foundation Chose Eigenlayer as a Security Partner
  • Judge Kaplan Had 'No Love' for Sam Bankman-Fried, Legal Expert Says
    07:08
    Judge Kaplan Had 'No Love' for Sam Bankman-Fried, Legal Expert Says
  • How Bitcoin and Ether's Options Contracts Combined Expiry Could Spike Volatility
    01:11
    How Bitcoin and Ether's Options Contracts Combined Expiry Could Spike Volatility
  • Customers of eToro in European countries that allow such trading in contracts for differences (CFDs), were told via email on the evening of Friday, Jan. 8: “If you do not increase the margin to 100%, then the position will be closed at 21:00 GMT today.” 

    This came with an explainer, saying clients with available balance could keep the positions open by adding funds, while those that don’t have available balances had the option to close other positions in order to free up funds.

    However, disgruntled traders have taken to Twitter, stating that four hours later eToro closed all leveraged positions on cryptocurrencies, including those that users had attempted to keep open. 

    “eToro violated the contracts it had agreed with its clients,” said Slavko Vesenjak, an attorney in Slovenia who represents several eToro clients from across Europe. “A four-hour notice before closing all leveraged crypto positions made people wake up in their different time zones seeing their positions closed.”

    Amy Butler, global head of PR for eToro, said the vast majority of eToro’s customers were unaffected by the changes. 

    “We understand that there are several dozen frustrated clients and we are working hard to resolve their frustrations,” Butler said.

    Also last week, eToro, which is said to be planning a $5 billion public listing, raised its required deposit level from $200 to $1,000 in order to better manage overwhelming demand from hopeful crypto traders attracted by rocketing prices. 

    The temporary decision to increase deposit minimums is because of the surge in demand, said Butler. As far as the removal of leveraged crypto in Europe, this decision was taken “from an internal risk management perspective,” said Butler, adding that it was not related to any potential IPO plans.

    “The eToro clients will get their funds. If eToro does not refund them, the Cyprus state will,” said Jurij Toplak, a law professor at Alma Mater Europaea in Slovenia and an adjunct at New York’s Fordham Law.

    Toplak said aggrieved eToro customers he’s representing will be approaching the Cyprus Securities and Exchange Commission in a bid to have eToro’s license revoked.

    “I guess cryptocurrencies were just going up and eToro discovered they were not able to pay out that much money to the customers,” Toplak said in an interview. “And then they just canceled the contracts.”

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.