Australian Court Imposes Heavy Penalty on Kraken Operator

Australia's corporate watchdog, the Australian Securities and Investments Commission (ASIC), announced on Thursday that the country's federal court has ordered the local operator of the Kraken crypto exchange, Bit Trade, to pay an A$8 million ($5.1 million) fine for unlawfully issuing a credit facility to over 1,100 customers.

ASIC initiated civil proceedings against Bit Trade last year, accusing the company of failing to comply with rules for its margin trading product. The regulator highlighted that Bit Trade did not properly assess whether the margin trading product was suitable for its customers, leading to significant financial losses.

Unsuitable Product Distribution

According to ASIC, Bit Trade's failure to determine the right customers for the margin trading product resulted in losses exceeding $5 million. The product, which allowed for margin extensions to be made and repaid in digital assets or national currencies, was issued to over 1,100 Australians without proper consideration of its appropriateness.

First Penalty of Its Kind

In August, the federal court ruled that the product constituted a credit facility, requiring a mandatory public document known as target market determinations, which Bit Trade failed to provide. This penalty marks the first instance against an entity for failing to have a target market determination, setting a precedent for future cases.

Kraken's Response

A Kraken spokesperson expressed disappointment with the court's decision, stating, "We believe these rulings significantly hamper growth in the Australian economy. We look forward to engaging constructively with policymakers and regulators as these rules are developed."