Australian Regulators Sue Crypto Exchange Linked to Kraken
The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Bit Trade Pty Ltd, the provider of the Kraken crypto exchange to Australian customers. The regulator alleges that Bit Trade failed to comply with design and distribution obligations for its margin trading product. These obligations require companies to create financial products that meet consumer needs and distribute them appropriately.
Margin Trading Product and Losses
The margin trading product offered credit facilities to customers, allowing them to buy and sell certain crypto assets on Kraken. ASIC claims that Bit Trade did not create a “target market determination” for the product before launching it. Since its launch in October 2021, at least 1,160 customers have used the product and incurred a total loss of around $8.35 million.
Legal Actions and Industry Scrutiny
ASIC is seeking declarations, pecuniary penalties, and injunctions against Bit Trade. The regulator aims to send a message to the crypto industry that products will be scrutinized for compliance with regulatory obligations in order to protect consumers. In response, Kraken’s local managing director expressed surprise and disappointment, stating that they believe the product is offered in compliance with Australian law.
No Clear Regulations in Australia
In related news, JPEX, a Hong Kong crypto exchange facing regulatory issues, has applied for deregistration in Australia. ASIC previously canceled FTX Australia’s license, impacting 30,000 customers. The crypto exchanges operating in Australia, including Kraken, BTC Markets, Swyftx, and Coinbase, are still awaiting government regulations for the sector.
Hot Take: Australian Regulators Take Action Against Crypto Exchange Linked to Kraken
Australian securities regulators have taken legal action against Bit Trade Pty Ltd, the provider of the Kraken crypto exchange in Australia. The regulators allege that Bit Trade failed to comply with design and distribution obligations for its margin trading product, resulting in significant losses for customers. This lawsuit sends a message to the crypto industry that regulatory compliance is essential to protect consumers. However, the lack of clear regulations in Australia poses challenges for crypto exchanges operating in the country. As the industry continues to grow, it is crucial for regulators to establish comprehensive guidelines to govern the sector effectively.
By
By
By
By
By