First of all I am sorry for your loss as it seems that you didnt cheat in any way. I am not working for etoro but also placing bets as you folks. I would like to give some countrary thoughts to the idea that its a scam and looking forward for other oppinions. You can check my account Frozzen1 on Etoro and see that I joined around 2014 and lost money in the beginning, stoped and then gave it another try.
I have to say that I lost in the beginning because of own mistakes and lack of experience to much risk taking and so on… Then I remembered the fact that only around 3-10% are actually long term winners as daytraders.
So lets put the hat on as if we would be a shareholder of such a company:
1. Zero Sum games with spread
Whenever people make small bets on zero sum games (forex, futures, options,…) the company will get the spread no matter what person wins or loses the trades. So etoro is just acting as a dealing desk “Market maker” same like sportbetting or casino. And eventually most “investors” will slowly lose to the company because of the spreads they pay.
2. Earnings from spread margins
Big bets, for instance when a successful trader with many followers places a bet together with all his copiers money, bets are forwarded by NDD (No dealing desk) to the liquidity provider. And etoro will just charge a biger spread than he pays to the liquidity provider thus earn the difference on each trade. The result is that even if the trader is a long term winner etoro will as well profit the more that trader has followers and wins. And thats the difference to brokers or betting companies who ownly act as book maker and have not interest on long term winners.
3. High frequency trading, latency and hacking
HFT is allready very old but really started when rapid-fire computer-based HFT developed gradually since 1983 after NASDAQ introduced a purely electronic form of trading. So since then many parties (banks, traders, brokers, programmers,…) tried to get an advantage over each other with low latency strategies, spoofing, automated News-based trading,… you name it there are hundreds of possiblities. So thats why companies have to protect them selfs from the events of network and hardware failures, either because of sabotage/hacking or a technical failure. So thats why I guess your money got confiscated. If they wouldn’t have such clouses in there terms and agreements, any hacker could try to slow there system down with DOS attacks or in other ways try to manipulate Etoro in order to place no risk bets.
4. Software problems and support
As a software programmer I know that there allways are bugs, crashes, system overload, design flaws and so on. So I fully understand, and rather have these flaws corrected instead of having a system online casino like where a random generator decides if you lose or win and some predesigned chart is displayed. You ask why other big brokers dont have that? I guess its just because its a start up company and nobody has invested 100s of millions into it yet.
I made recently the experience also with other well known brokers, that they dont answer for long time even when you want to add money to your account because of such a great boom, I dont blame them as I think there is really a massive run since the cryptocurrencies got so much discussed in non economy circles. -> of course as self imployed myself I would just hire many more people and outsource (Tunesia? why not) not to miss out on the action, profit and growth.
5. Conclusion, thoughts and question
Even dow its really bad luck for you to lose this money, I dont think they really try to stop people trying to cash out and risk bad reputation in order to lose the profit from 100 of million transaction yearly on them they earn constantly. On the otherside they have to protect themself from potential cheaters. (again I am not saying you are one of them)
Of course I dont have any proves that they are honest or not, just it seems to me that they wouldnt need to cheat as they are generating allready so much money anyways.
So thats why I started just to copy traders as I am a loser myself, I have to find a good mix of traders for my portfolio.
Did I miss out something? Again I am neutral individual and also just a gambler or investor how ever to name it and looking forward to more oppinions as I plan to invest longterm much more.