As per the recent publication, Australia’s regulatory body, the Australian Securities and Investments Commission (ASIC), has initiated legal proceedings against Bit Trade, the operator of the Kraken cryptocurrency exchange in the country.
ASIC Takes Legal Action
This action is taken due to Bit Trade’s alleged failure to meet the design and distribution requirements pertaining to one of its trading offerings.
In a statement released by ASIC on September 21, the regulatory body has alleged that Bit Trade failed to carry out a target market assessment before launching its margin trading product to the Australian customer base.
Losses Totaling $8.35M
The regulatory authority asserted that, following the implementation of design and distribution obligations in October 2021, a minimum of 1,160 Australian customers utilized Bit Trade’s margin trading product, resulting in a collective loss of around $8.35 million that is presently equivalent to 12.95 million Australian dollars.
Sarah Court, ASIC’s Deputy Chair, stressed that these proceedings are a clear signal to the crypto industry that the agency will persist to ensure compliance with Australia’s consumer protection laws concerning financial products.
Importance of Compliance
Court noted: “ASIC’s action should be a reminder of the importance to comply with the design and distribution obligations so that financial products are distributed to consumers appropriately.”
Unexpected Actions on Behalf of ASIC
The Managing Director of Kraken’s Australian operations, Jonathon Miller, noted that ASIC’s actions came unexpectedly, as he was under the impression that the product was in line with the local regulatory requirements.
He said: “We have been attempting to constructively engage with ASIC on this matter for some time to ensure our product offering, as an AUSTRAC-registered Digital Currency Exchange, remains compliant,” Miller added: “We are therefore both surprised and disappointed to have received today’s enforcement action.”
Established in 2013, Bit Trade rapidly earned a solid reputation for providing user-friendly and advanced products. However, the entity is now responsible for Kraken’s operations in Australia and was acquired by the firm in 2020 during the company’s expansion into the Asia-Pacific (APAC) region.