Australian Crypto Exchange Bit Trade Faces Civil Proceedings for Regulatory Non-Compliance
Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), has taken legal action against Bit Trade Pty Ltd, the provider of the Kraken cryptocurrency exchange to Australian customers. The regulator alleges that Bit Trade has failed to comply with design and distribution obligations (DDO) for its margin trading product.
The DDO requires financial firms to design products that meet consumer needs and distribute them appropriately. ASIC claims that Bit Trade did not make a target market determination before offering the product to customers and continued to offer it despite being notified of ASIC’s concerns in June 2020.
Bit Trade’s margin trading product offers customers a credit facility to buy and sell crypto assets on the Kraken exchange. Customers can receive credit up to five times the value of their collateral. Since the implementation of DDO in October 2021, at least 1,160 customers have incurred losses totaling approximately A$12.95 million ($8.35 million).
ASIC Seeks Penalties and Injunctions
ASIC is seeking declarations, pecuniary penalties, and injunctions to prohibit Bit Trade from continuing its non-compliant conduct. The regulator aims to send a message to the crypto industry about the importance of complying with regulatory obligations to protect consumers.
Hot Take: ASIC Cracks Down on Crypto Industry Compliance
The Australian Securities and Investments Commission (ASIC) has launched civil proceedings against Bit Trade Pty Ltd, provider of the Kraken cryptocurrency exchange in Australia, for failing to meet design and distribution obligations (DDO) for its margin trading product. ASIC alleges that Bit Trade did not determine its target market before offering the product and continued offering it despite being informed of regulatory concerns. With losses totaling around A$12.95 million since the implementation of DDO, ASIC is seeking penalties and injunctions to prevent Bit Trade from further non-compliance. This move demonstrates ASIC’s commitment to protecting consumers and ensuring compliance within the crypto industry.
Source: The Economic Times
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