eToro

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eToro

eToro

eToro is an Israeli social trading and multi-asset brokerage company that focuses on providing financial and copy trading services.[1] It has registered offices in CyprusIsrael, the United Kingdom, the United States, and Australia.[2][3][4][5] In 2018, the company’s value was $800 million.

eToro
Type Private
Industry Financial services
Investing online
Social investment
Bitcoin exchange
Founded 2007; 14 years ago
Founder Yoni Assia, Ronen Assia, David Ring
Headquarters LimassolCyprus
LondonUnited Kingdom
Tel AvivIsrael
Area served
Worldwide
Key people
Yoni Assia, CEO
Services Investment managementBrokerage firm
Number of employees
501-1000
Website www.etoro.com

 

 

eToro was founded as RetailFX in 2007[6] in Tel Aviv, by brothers Yoni Assia and Ronen Assia together with David Ring.[7]

In 2010, the firm released the eToro OpenBook social investment platform, along with its CopyTrading feature, that enables investors to view, follow and copy the network’s top traders automatically.[8] Later that year, the firm released its first Android app for access via mobile devices.[9]

Between 2007 and 2013, the company raised $31.5 million in four rounds of funding.[10][11] In December 2014, it raised $27 million from Russian and Chinese investors.[12] In December 2017, it joined CoinDash as partners to develop Blockchain-based social trading.[13] In 2018, it raised a further $100 million in a private funding round.[14] Overall, more than $162 million has been invested in the company by investment firms.[1][15][16]

In 2013, the firm introduced the capability to invest in stocks and CFDs, with an initial offering of 110 stock products.[17] The same year, it was authorized to offer its services in the UK by the FCA regulatory authority, under the subsidiary eToro UK.[18] In January 2014, the firm added cryptocurrencies to its investment instruments.[19][20]

In April 2014, the firm added 130 British and German stocks composing the FTSE 100 Index and the DAX30 indices to the company’s stock selection.[21]

In 2017, it launched a CopyPortfolio feature, enabling investors to copy investment portfolios from the best-performing traders.[22]

In 2018, it launched a cryptocurrency wallet for Android and iOS.[23][24] In May 2018, it entered the US market by offering 10 cryptocurrencies[25] In November 2018, it announced the launch of GoodDollar, a non-profit, open-source community project aimed to reduce global wealth inequality through universal basic income (UBI) using blockchain technology.[26]

In March 2019, eToro acquired Danish blockchain company Firmo for an undisclosed sum.[27][28] In October 2019, eToro released a sentiment-based crypto portfolio using AI technology to evaluate Twitter’s current positive or negative impressions of digital assets.[29] In November 2019, the firm acquired Delta, a crypto portfolio tracker application company, based in Belgium.[30][31]

As of May 2020, the firm had 13 million registered accounts.[32]

In March 2021, eToro announced that it is planning to become a public company through an SPAC merger.[33]

Operations[edit]

eToro’s main research and development office is located in Tel AvivIsrael. In addition to legal entities registered in the UKChinaUSAustralia and Cyprus. eToro is regulated by the CySEC authority in the EU.[4] It is authorized by the FCA in the UK,[18][20] and by FinCEN in the United States,[2] and by the ASIC in Australia.[34] In 2013, eToro has been fined €50.000 by CySEC due to detected weaknesses which concerned its organisation and operation structure back to 2010.[35] In 2015, eToro was added to Quebec blacklist as an unauthorized foreign company that encouraged residents to invest in binary options via its trading platform.[36] The company reported operating in 140 countries.[37][38]

Marketing and expansion[edit]

In August 2018, eToro announced a sponsorship deal with seven UK Premiership teams including Tottenham HotspurBrighton & Hove Albion F.C., Cardiff City F.C.Crystal Palace F.C.Leicester City F.C.Newcastle United F.C., and Southampton F.C.. The partnership continued for the 2019-20 Premier League with Aston Villa F.C. and Everton F.C. joining Southampton F.C., Tottenham Hotspur F.C., Crystal Palace F.C., and Leicester City F.C.[39] In 2018, it was announced that Game of Thrones actor Kristian Nairn would be featured in an advertising campaign for eToro.[40] It was released in October 2018 on YouTube and featured the ‘HODL’ internet meme.[41][42] In October 2020, Rugby Australia announced that eToro would be a Presenting Partner for the 2020 Tri Nations rugby series.[43]

In February 2019, The South China Morning Post reported that “the brand is planning expansion in Southeast Asia and potentially Hong Kong”.[44] In March 2019, eToro launched its cryptocurrency trading platform and its standalone cryptocurrency wallet to US users.[45][46][47]

Controversies[edit]

2021 closure of leveraged positions[edit]

On January 7, 2021, eToro informed its European clients that “due to the current high volatility in crypto markets, and the risk it presents, eToro has disabled the ability to open new leveraged crypto positions. There is no impact on existing, open leveraged crypto positions.”[48] The next day, it notified its European clients that “due to extreme market volatility in the crypto markets, margin positions for all leveraged crypto positions” should be changed to nonleveraged, or they would be closed within four hours.[49] A few hours later, the firm closed all leveraged positions. Together with any profit or loss incurred, money was returned to users’ account balance.[48]

Lawyers and users expressed intent to file a class action lawsuit and a motion to revoke eToro license in Cyprus.[50] “Etoro violated the contracts it had agreed with its clients. A four-hour notice before closing all leveraged crypto positions made people wake up in their different timezones and seeing their positions closed. People were losing these positions in their sleep or at work. Clients followed all the steps eToro gave to keep these CFD’s open, and eToro closed them anyway,” said Slavko Vesenjak, an attorney in Slovenia, who represented several eToro clients from across Europe.[48] The firm first said that the measure affected several dozen users,[48] and then changed the number to “two percent of users”,[51] and it has 17 million users. A law professor Jurij Toplak said he would gather users and file motion to revoke eToro license in Cyprus where it is registered.[50]

2021 short squeeze[edit]

Another episode of customer complaints followed the GameStop short squeeze when eToro one-sidedly changed the terms of service to enforce a stop loss on non-leveraged buy positions that didn’t have it enabled. While stop-loss is designed to reduce risks on the volatile markets, the enforcement without notice caused loss for numerous clients that had the positions closed on unfavorable terms. In addition, as eToro forced the sale of a huge amount of stock, it also brought down the price of shares of Gamestop and other companies favored by non-professional investors.[52]

 

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