Australian Securities and Investments Commission Sues Bit Trade Over Margin Trading Product on Kraken
The Australian Securities and Investments Commission (ASIC) has taken legal action against Bit Trade, the provider of the Kraken cryptocurrency exchange in Australia. ASIC has accused Bit Trade of failing to comply with design and distribution requirements for its margin trading product.
ASIC’s design and distribution obligations, introduced in October 2021, mandate that companies offering financial products in Australia must design products that meet customer needs and distribute them appropriately. The regulator claims that Bit Trade’s margin trading product, which offers credit for crypto asset trading on Kraken, is a “credit facility” and a “margin extension.”
Alleged Failure to Comply with Obligations
According to ASIC, Bit Trade did not make a “target market determination” for the margin trading product before offering it to Australian customers. As a result, at least 1,160 customers lost approximately AUD 12.95 million while using the product.
ASIC notified Bit Trade of its non-compliance in June 2022 but alleges that the company continued to offer the product without making the necessary evaluations. This civil lawsuit follows ASIC’s ongoing clampdown on the crypto industry in Australia.
ASIC’s Message to the Crypto Industry
ASIC Deputy Chair Sarah Court emphasized that this legal action should serve as a reminder to the crypto industry about complying with regulatory obligations to protect consumers. The regulator has been actively scrutinizing products offered by crypto companies in Australia.
Kraken is not the only crypto company facing regulatory scrutiny from ASIC. In August, eToro was sued by ASIC for alleged violations of design and distribution obligations. Additionally, ASIC previously revoked Binance’s operational license in Australia and raided its offices as part of ongoing investigations.
Hot Take: ASIC Takes Action Against Bit Trade for Margin Trading Product
ASIC has filed a civil lawsuit against Bit Trade, the provider of Kraken cryptocurrency exchange in Australia, accusing it of disregarding design and distribution requirements for its margin trading product. The regulator claims that Bit Trade failed to comply with its obligations and did not make a target market determination before offering the product to Australian customers. As a result, customers have lost approximately AUD 12.95 million. This action by ASIC serves as a reminder to the crypto industry in Australia about the importance of complying with regulatory obligations. It follows previous regulatory actions against eToro and Binance, demonstrating ASIC’s commitment to protecting consumers and ensuring compliance within the crypto sector.
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