ISRAEL AT WAR - DAY 150

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Twitter partners with Israeli high-risk trading platform eToro

While details of the deal are unknown, experts warn that too close a relationship between the companies could attract scrutiny from regulators

Simona Weinglass is an investigative reporter at The Times of Israel.

The Twitter splash page is seen on a digital device on April 25, 2022, in San Diego. (AP Photo/Gregory Bull, File)
The Twitter splash page is seen on a digital device on April 25, 2022, in San Diego. (AP Photo/Gregory Bull, File)

Twitter has partnered with the Israeli-founded online trading company eToro to allow its users to trade stocks, cryptocurrencies and other assets.

Since April 13, Twitter users who type a dollar sign and the ticker symbol of certain shares or index funds are directed to a page that encourages them to trade with eToro. The page provides Twitter users with financial information and market charts of the asset and features a large button that says, “View on Etoro.” Users who click on the button are taken to the eToro trading platform.

Experts consulted by The Times of Israel said that if the relationship is one of an advertiser and platform, where Twitter receives a flat fee for each click-through to eToro, this is not problematic.

However, if the relationship is more intertwined, this could attract the attention of regulators in Europe or the United States.

In recent years, Twitter has become a popular venue for financial tips and stock recommendations, where a single Tweet by the company’s now-owner Elon Musk can cause a company’s share price to soar or crash.

Musk bought Twitter for $44 billion in October 2022 and since then has made several controversial changes to the platform. He laid off thousands of employees, reinstated banned accounts like those of former US president Donald Trump and kickboxer Andrew Tate as well as labeled some news outlets “government-funded media,” leading US-based PBS and NPR to quit the platform.

File: Elon Musk departs the Phillip Burton Federal Building and United States Court House in San Francisco on Jan. 24, 2023. (AP Photo/ Benjamin Fanjoy, File)

He has also expressed his intention to turn Twitter into a so-called “super app,” an all-in-one application that offers services ranging from video chatting to ride sharing to banking.

On April 13, EToro tweeted: “Very excited to be launching a new $Cashtags partnership with @Twitter which will enable Twitter users to see real-time prices for a much wider range of stocks, crypto & other assets as well as having the option to invest through eToro.”

EToro is an online brokerage that allows mom-and-pop traders, also known as retail traders, to buy and sell stocks, commodities, cryptoassets, currencies, indices and ETFs (exchange-traded funds), as well as derivatives of some of these assets.

A July 2021 Times of Israel investigation cited critics of the company who claimed that a significant share of eToro’s revenue comes from leveraged CFDs (Contract for Differences), a complex financial product ill-suited for unsophisticated investors, most of whom lose money on CFDs.

The Times of Israel investigation also pointed to staffing connections between eToro and Israel’s outlawed, largely fraudulent binary options industry: More than two dozen past and present employees of eToro have also worked for a binary options company, according to their LinkedIn profiles.

An ad for EToro on the London Underground in 2018. (Facebook screenshot)

One expert in securities markets regulation told The Times of Israel on background that media reports have thus far provided few specifics about the deal between Twitter and eToro. But if eToro is simply an advertiser that pays Twitter for click-throughs to its website, there is nothing untoward about this.

“We don’t know what the contract between Twitter and eToro looks like,” Mikhail Gordon, another anti-money laundering expert who works for US-based Affiliated Monitors, an integrity monitoring company, and is also a professor at the International Anti-Corruption Academy in Austria, told The Times of Israel.

“If it just says, Twitter is going to allow you to access a link to Etoro. Well, that’s just a link. It’s no different than a link to CNBC or a link to Forbes.”

“As long as Twitter doesn’t encourage buying stock in Etoro and he doesn’t discuss particular stocks or assets that you could trade on Etoro, then it is not a problem.”

Illustrative: Traders work on the floor at the New York Stock Exchange in New York, November 10, 2022. (AP Photo/Seth Wenig, File)

If Twitter were a part-owner of Etoro, on the other hand, or were to receive a portion of the profits of eToro, this could raise two types of issues, Gordon said.

First, she said, “Etoro is a high-risk trading platform, Twitter would really have to increase their anti-money laundering efforts. Yet Musk is the guy who cut compliance and legal staff at Twitter.”

Etoro logo. (Courtesy)

Second, she said, if Twitter were to share data about its users with eToro without their permission, this could potentially violate certain jurisdictions’ privacy laws that require affirmative consent from users.

“Twitter is based in California. They’re subject to California consumer privacy laws. So if they want to share they have to give users the choice to opt out.”

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