The Australian Securities and Investments Commission (ASIC) has alleged that Bit Trade Pty Ltd, the provider of cryptocurrency exchange Kraken, caused Australians to lose approximately $12.95 million due to its failure to comply with local laws. Here are the details…
A lawsuit was filed against the cryptocurrency company
Therefore, the financial regulator filed a lawsuit against Bit Trade, highlighting how its margin trading product did not comply with the design and distribution obligations attached to it. According to the regulator, Bit Trade did not correctly identify the target market before launching the product. “ASIC’s case focuses on Bit Trade’s failure to conduct a target market determination as required by law before offering the product to Australian customers,” it said.
ASIC describes Bit Trade’s margin trading product as a credit facility, while Bit Trade calls it a “margin extension” that allows users to receive up to five times their assets. Bit Trade has been offering its margin trading product since 2020 and ASIC said it notified the company of its concerns in 2022. However, the exchange continued to offer the product without identifying the necessary market. The regulator is seeking penalties, injunctions and injunctive relief against the exchange. ASIC Deputy Chairman Sarah Court said the transactions would alert other crypto companies to comply with the country’s financial regulations. Court added:
ASIC’s action should serve as a reminder of the importance of complying with design and distribution obligations to ensure that financial products are appropriately distributed to consumers.
Kraken expressed shock and disappointment
Kraken Australia Director Jonathon Miller expressed disappointment with the enforcement action against the company. He vowed to seek further clarification from regulators and emphasized that his products were fully compliant with local laws. ASIC’s move to crack down on Bit Trade is in line with a wider trend of regulatory oversight in the cryptocurrency industry. In July, ASIC revoked FTX Australia’s license as part of efforts to create comprehensive regulatory frameworks.
Additionally, as Kriptokoin.com reported, traditional financial institutions such as Westpac and National Australia Bank (NAB) are taking measures to limit payments to cryptocurrency exchanges. This is in line with their strategy to reduce customer exposure to potential scams and risks associated with the crypto market.
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