The Federal Court of Australia has fined Bit Trade, the operator of Kraken’s Australian exchange, $8 million for offering an unauthorized margin lending product.
The Australian Securities and Investments Commission (ASIC) accused the firm of failing to conduct suitability checks on customers and offering the service without a required Target Market Determination (TMD). From October 2021 to August 2023, over 1,100 Australian customers paid $12 million in fees, with collective user losses totaling $7.85 million.
Justice John Nicholas condemned Bit Trade for prioritizing revenue over compliance, labeling its regulatory processes “seriously deficient.” The court also ordered Bit Trade to cover ASIC’s legal costs. ASIC Chair Joe Longo called the ruling a landmark decision, emphasizing the importance of TMDs in protecting investors.
Kraken criticized the ruling, arguing that existing regulations are outdated and calling for more tailored crypto-specific laws. The company had previously expressed concerns over inefficiencies in Australia’s regulatory framework.
ASIC is now consulting with the crypto industry to update its guidance and clarify when crypto products fall under financial regulations.
Opposition figures criticized the government for leaving the sector in “regulatory limbo,” warning that excessive enforcement could hinder Australia’s crypto market growth. The $8 million fine serves as a warning to other crypto firms about non-compliance risks.
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