The Australian Securities and Investment Commission (ASIC) is taking legal action against Bit Trade, the provider for crypto exchange Kraken, over a margin trading product.
In a statement released on September 21, ASIC stated that Bit Trade failed to meet the design and distribution obligations for the product it offers to Australian customers on the Kraken exchange. It also did not make a target market determination for the product before offering it to Australian customers, as required by law. As a result, ASIC alleges that 1,160 Bit Trade customers lost A$12.95 million ($8.3 million) using the product.
ASIC Deputy Chair Sarah Court emphasized that this legal action should serve as a reminder to the crypto industry that products will be closely examined to ensure compliance with regulatory obligations in order to protect consumers.
We are suing Bit Trade, provider of the Kraken crypto exchange in Australia, for allegedly failing to comply with the design and distribution obligations (DDO) for its margin trading product. Since October 2021, customers have lost about $12.95 million https://t.co/MCRYqah0dP pic.twitter.com/zURQ2xDw7M
- ASIC Media (@asicmedia) September 20, 2023
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Kraken Surprised By ASIC’s Move
Kraken expressed surprise at ASIC’s legal action, according to a report by CoinTelegraph. The crypto exchange stated that it had been trying to engage with ASIC to ensure compliance with its product offering as an AUSTRAC-registered Digital Currency Exchange.
The number of Bit Trade customers who used the margin trading product exceeded 1,160 individuals in Australia. ASIC had notified Bit Trade of its failure to comply with local obligations in June 2022.
Hot Take: ASIC Takes Action Against Bit Trade Over Margin Trading Product
The Australian Securities and Investment Commission (ASIC) has filed a lawsuit against Bit Trade, the provider for Kraken crypto exchange in Australia. According to ASIC, Bit Trade did not fulfill the design and distribution obligations for its margin trading product offered on Kraken. This failure to comply with regulatory requirements resulted in a reported loss of A$12.95 million ($8.3 million) for 1,160 Bit Trade customers. The legal action sends a strong message to the crypto industry about the importance of meeting regulatory obligations to protect consumers. Kraken expressed surprise at ASIC’s move and stated its efforts to engage with the regulator for compliance. ASIC had previously notified Bit Trade of its non-compliance in June 2022.
