Highly-rated cryptocurrency exchange platform eToro took a very surprising step on Friday when it decided to close the leveraged crypto positions due to what it termed “extreme market volatility.”
Closing the crypto leveraged position ultimately denied users the opportunity to purchase into crypto derivatives. It equally prevented them from exploring the very profitable financial contracts, which give room for marginal trading such that investors are permitted to pay very few percentages of the contact’s notional payoff.
Users failed to follow the platform’s early instructions
The moves didn’t go down well with investors in the United States and the United Kingdom. They were in the mood of trading more digital currencies when the decision to shut down the crypto leveraged position abruptly.
The platform reached out to customers who support trading in contracts for difference (CFDs) via their email address, urging them to increase the sales margin to 100% to prevent the closure of the position at 21: 00 GMT.
Information passed across to all users further stressed that customers with sufficient funds in their wallet could keep the contract selling positions open as long as they keep adding more funds to their accounts balance.
As for clients with insufficient funds, they are advised to close other positions to generate more funds into their CFDs trading position to keep it open. Unfortunately, only a few of the users responded to the directories, leaving eToro executives with no option other than to close the leveraged position four hours later.
US and UK-based investors gutted With Platform’s unfavorable decision
The decision to close the leveraged crypto position left many users disappointed. They were heartbroken over the short time given to them to adhere to the initial instruction sent to them. According to one of the investors, Slavko Vesenjak, via his official Twitter handle, four hours weren’t enough to fund their CFDs trading position as they would first need to close other openings.
Slavko Vesenjak, a representative of many eToro users in Slovenia, said that the exchange platform’s recent move was a violation of its agreement with clients. He stressed out that many users involved in the leveraged crypto positions did little to save the situation within a four-hour notice due to the differences in time zones.
Reacting to Vesenjak’s tweets, eToro’s global head of PR Amy Butler, revealed that only a few users were affected by the move. However, he stated that the eToro’s executive members are working hard to ensure that all affected clients will be compensated in due time. He also confirmed the platform’s decision to bring the deposit level from $200 to $1000 due to its desire to help ho full crypto traders overcome the high prices involved in trading.
Lastly, Jurij Toplak, a professor of law at Alma Mater Europaea, told affected investors to stay calm because they will be compensated by the platform to avoid being interrogated by the Cyprus Securities Exchange Commission. He believes the regulatory body might be forced to revoke eToro’s trading license should it fail to compensate all affected users.