Australian Regulator Takes Legal Action Against Bit Trade
The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Bit Trade, the provider of services from US crypto exchange Kraken in Australia. According to ASIC, Bit Trade failed to comply with design and distribution obligations for its margin trading product and continued offering it despite being notified by the regulator in June 2022.
ASIC alleges that Bit Trade did not make a target market determination for the product before offering it to customers. The margin trading product provides customers with credit to buy and sell crypto assets on Kraken, allowing them to receive an extension of credit up to five times the value of their collateral.
Since the launch of the product in October 2021, at least 1,160 customers have incurred a total loss of approximately AUD 12.95 million ($8.35 million). ASIC is seeking declarations, pecuniary penalties, and injunctions to prohibit Bit Trade’s ongoing conduct.
Regulatory Scrutiny on Crypto Exchanges in Australia
This legal action by ASIC serves as a warning to the crypto industry that regulatory obligations must be met to protect consumers. Other major exchanges in Australia have faced issues this year due to insufficient regulation.
In May, the largest digital asset exchange lost deposit and withdrawal services through two domestic payment providers. In July, ASIC canceled the financial services license of FTX Australia, which was owned by the bankrupt cryptocurrency exchange FTX.
Banks Restrict Payments to Crypto Trading Platforms
Furthermore, major Australian banks are taking steps to restrict payments to “high-risk” exchanges. The Commonwealth Bank of Australia (CBA) announced its intention to limit payments to crypto trading platforms, followed by National Australia Bank (NAB).
Hot Take: Australian Regulator Cracks Down on Crypto Industry
The legal action taken by ASIC against Bit Trade is a clear message to the crypto industry in Australia. The regulator’s aim is to ensure compliance with regulatory obligations and protect consumers. This move comes in the wake of other exchanges facing issues due to insufficient regulation.
With major banks also restricting payments to crypto trading platforms, the Australian crypto industry is facing increased scrutiny. It remains to be seen how comprehensive regulations will be implemented to address these concerns and protect investors.
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