A Wall Street Journal report Published January 12, claims European eToro users were given just four hours notice that the platform’s margin trading would be halted on Friday.
EToro users were informed to increase their margin collateral to 100% in an email sent January 8 at 4:46 UTC. The platform closed the contracts of any European crypto trader who had not increased their margin collateral by 9% to 100%. : 00 hours.
When the company called in the margin transactions, the users’ crypto was automatically converted into US dollars.
Amy Butler, an eToro spokeswoman, said that “most traders were in the black” when margin positions were called, with the price of Bitcoin approaching nearly $ 42,000 at the time.
However, Jurij Toplak, a professor of law at Fordham University, warned of the future profits that eToro users looking for leveraged crypto products will miss out on, citing:
“There is a lot of loss for the users here. They are future losses: if Bitcoin rises to $ 70,000 now, the user cannot get this money. “
EToro users looking to short the markets at their top would also have missed significant profit opportunities.
Other traders have highlighted the possible short-term consequences of eToro’s decision. Twitter user Phill Gallagher claimed received the email notification about margin trading at approximately 2:30 am local time, stating:
“This creates a major tax problem that could have been resolved with a brief warning. Very unprofessional. I will now find a new trading platform.”
The platform is also temporarily available on the same day quadrupled its minimum deposit requirements, citing “unprecedented demand” for its services from new users. EToro recently claimed to have amassed 200,000 new account logins in the first week of January, making daily crypto volumes more than 10 times the 2020 average.
.@eToro has seen unprecedented demand from new users for our services. To manage demand and ensure that our existing community of 17 million registered users can continue to have uninterrupted access to our services, we have temporarily increased the minimum deposit amount for new users to $ 1,000.
– eToroService (@eToroService) January 8, 2021
Many Crypto Twitter users were critical of eToro for its minimal deposit increase, noting that the move will mainly affect first-time traders.
“I’m not sure this is a good idea,” said Twitter user evertmulder85. adding, “It’s a beginner’s platform. The profession starts small. $ 1,000 is not small. “
Rumor has it that EToro is prepare for an IPO in the second quarter of this year after reportedly “doubling its revenue to $ 500 million” and gaining five million new users last year.