The Australian Securities and Investments Commission (ASIC) has won the court case against Kraken’s operator, Bit Trade, for failing to comply with design and distribution obligations.
Bit Trade was found lacking in a straightforward design when it offered margin trading, as a Federal Court ruled against it on Friday. Bit Trade, which operates Kraken in Australia, had been providing a “margin extension” product without a target market determination.
The ruling noted that the platform had violated the country’s Corporations Act, Section s994B(2), since October 2021.
The securities regulator acknowledged this and took legal action against the well-known global crypto firm. The action serves as a warning to the Australian crypto industry that ASIC will persist in its efforts to prosecute non-compliant crypto participants.
Sarah Court, the Deputy Chair of ASIC, stated that this would “ensure they comply with regulatory obligations to protect consumers.”
Financial products must be distributed to consumers in a manner that is legally mandated. Consumers should be afforded complete protection by the law when engaging in crypto-asset product transactions.
Bit Trade, an AUSTRAC-registered company, offered a product enabling margin extensions in fiat and cryptocurrencies.
Additionally, the design and distribution obligations necessitate that companies develop financial products tailored to Australians’ requirements. Additionally, determining the target market has a significant impact on the obligation.
Nevertheless, the ASIC contended that Bit Trade’s margin trading product was introduced without a target market determination to identify the appropriate consumers.
The regulator initiated a civil lawsuit against the company in September 2023.
The ASIC also emphasized that Bit Trade’s product violated regulations by operating as a credit facility, as it permitted Australians to receive a 5x credit extension of the asset’s value.
Kraken acquired Bit Trade in 2020 to provide digital asset services in Australia.
The trending P2E game Hamster Kombat has introduced a new way for users to earn more for those who withdraw…
Like Google, Amazon has released an AI-powered video generator, but it can only do a few things at a time…
Upchieve, a free app offering 24/7 college counseling and tutoring for low-income students, introduces a new tool to support teachers…
The crypto regulators in Hong Kong may launch Ethereum ETF staking by the end of 2024, which could likely give…
The US SEC is seeking a Coinbase lawsuit discovery extension as they have reached an agreement with Coinbase to shift…
Worldcoin, a global digital identity and cryptocurrency initiative, has introduced Face Auth, a new security measure for the World ID…