Australian Financial Regulator Files Lawsuit Against Kraken Subsidiary
The Australian Securities and Investments Commission (ASIC) has filed a civil lawsuit against Bit Trade, a subsidiary of the crypto exchange Kraken, for allegedly failing to comply with margin trading regulations. ASIC claims that Bit Trade did not make a “target market determination” for its margin product before offering it to consumers, as required by law. A target market determination is a document that outlines the appropriate customer base for a product based on their needs and financial situation.
ASIC’s Allegations
According to ASIC, Bit Trade’s margin trading product is considered a credit facility because it offers customers credit for buying and selling specific crypto assets. The regulator states that the firm has been offering the product since early 2020 but failed to comply with regulations implemented in October 2021. ASIC highlights that at least 1,160 Australian customers have used the margin trading product and collectively lost $12.95 million since then.
ASIC’s Message to the Crypto Industry
Sarah Court, Deputy Chair of ASIC, emphasizes that these legal proceedings should serve as a warning to the crypto industry. She states that the ASIC will continue scrutinizing products to ensure compliance with regulatory obligations and protect consumers.
About Kraken and Bit Trade
Kraken, headquartered in San Francisco, acquired Bit Trade in 2020. This lawsuit specifically targets Bit Trade’s operations in Australia.
Hot Take: Australian Regulator Cracks Down on Margin Trading
Australia’s ASIC has taken legal action against Bit Trade, a subsidiary of Kraken, accusing it of violating margin trading regulations. The regulator alleges that Bit Trade failed to meet the requirement of making a “target market determination” before offering its margin product to consumers. This lawsuit sends a strong message to the crypto industry that regulatory compliance is crucial for consumer protection. It also highlights the importance of adhering to regulations, as ASIC claims that at least 1,160 Australian customers lost $12.95 million using Bit Trade’s margin trading product. Kraken’s acquisition of Bit Trade in 2020 makes it directly involved in this legal battle.
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