A Wall Street Journal report published Jan. 12 claims European eToro users were given just four hours notice that the platform’s margin trading services would be halted on Friday.
EToro users were informed they must increase their margin collateral to 100% in an email sent at 4:46 UTC on Jan. 8. The platform closed the contracts of any European crypto trader who didn’t bolster their margin collateral to 100% by 9:00 PM.
When the firm called in the margin trades, the users’ crypto was automatically converted into U.S. dollars.
Amy Butler, an eToro spokeswoman, said “most traders were in the black” when the margin positions were called, with Bitcoin’s price approaching $42,000 at the time.
However, Fordham University law professor, Jurij Toplak, warned of the future profits that eToro users seeking leveraged crypto products will miss out on, stating:
“There’s a lot of loss here for the users. It’s future losses: if Bitcoin rises to $70,000 now the user has no way of getting this money.”
EToro users seeking to short the markets at their top also would have missed out on significant profit opportunity.
Other traders have emphasized the potential ramifications of eToro’s short-notice decision. Twitter user Phill Gallagher claimed to have received the email notification on margin trading at roughly 2:30 AM local time, stating:
“This creates a big tax issue, which could have been managed with a little notice. Very unprofessional. I will now find a new trading platform.”
On the same day, the platform also temporarily quadrupled its minimum deposit requirements, citing “unprecedented demand” for its services from new users. EToro recently claimed to have garnered 200,000 new account sign-ups in the first week of January, driving daily crypto volumes exceeding 2020’s average by more than 10 times.
.@eToro has seen an unprecedented demand for our services from new users. To manage demand & ensure our existing community of 17M registered users can continue to access our services uninterrupted, 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 the minimum deposit hike, noting that the move will primarily impact beginner traders.
“I’m not sure this is a good idea,” said Twitter user evertmulder85. adding: “It’s a beginner platform. The appeal is starting small. $1K is not small.”
EToro is rumored to be preparing for an initial public offering in the second quarter of this year after reportedly “doubling its revenue to $500 million” and gaining five million new users last year.
This post first appeared here: https://cointelegraph.com/news/etoro-slammed-for-short-notice-halt-to-btc-margin-trading-amid-ath-price-surge