[timothygoltser]

It depends on the nature of the activity that got the account blocked - we place limits on the types of legitimate account activity that are likely to get a user blocked (sending too many orders too quickly, sending orders that could be batched as a flood of single orders, etc.), but for fraudulent or otherwise illegal activity, that liability is on the user.

When starting a new integration, we schedule a meeting with the brokerage in question (if they'll have us) to discuss issues of this nature. The response we've gotten so far has been "as long as you don't enable illegal activity or put unnecessary load on our service, we won't take action against you or your users," though we're sure some brokerages will have a more aggressive stance on this in the future. We aim to work in partnership with them and advocate for the ability to integrate in this way, and we encourage the brokerages that gives us an audience to build public APIs.

[melony]

For a copy trading app, what compliance problems do you envision using your service? Is the trader being copied liable if the people copying him lose money (generally speaking)?

[timothygoltser]

While I'm not fully qualified to comment on this (I'm not a lawyer/have no formal experience with securities law), my understanding is that it would depend on if the trader in question is providing investment advice. The SEC seems to have no clear position on the legality of copy trading at the moment - some of our customers are building copy trading apps, and they all seem to be in agreement that regulatory uncertainty is just one of the risks of building that sort of product at the moment.

[jhirschi]

There is probably a reason eToro, the premier copy trader, only does crypto copy trading in the US. Just food for thought. Effectively managing others' money would effectively make the trade-makers RIAs

[seandoh]

We spoke with some lawyers while building our social investing app to gain a clearer understanding of this. Like Tim said, we're not lawyers, but the ones we spoke to said that this is a major gray area.