Australia Federal Court has ordered Bit Trade, the local operator of the U.S.-based cryptocurrency exchange Kraken, to pay an AU$8 million ($5.1 million) fine for breaching market rules. The decision, delivered on Dec. 12 by Justice John Nicholas, sided with the Australian Securities and Investments Commission (ASIC), which accused Bit Trade of failing to comply with design and distribution obligations and acting as an unlicensed credit facility.
Justice Nicholas deemed the penalty appropriate, falling between ASIC’s request for AU$12.8 million and Bit Trade’s argument for a reduced fine of AU$2.5 million. The company must pay the fine within 60 days and cover court costs.
Kraken expressed disappointment with the ruling, stating, “We believe this case underscores the urgent need for tailored crypto legislation to provide clarity for Australian investors and businesses. These rulings, in our view, hinder the growth of Australia’s economy.”
Australia Targets Misleading Practices
ASIC’s case focused on Bit Trade’s offering of a “margin extension” product that allowed leveraged trading without a legally required target market determination (TMD). The court noted that over 1,100 Australians used the product, incurring $7 million in fees and interest, with losses exceeding $5 million. One investor reportedly lost nearly $4 million.
ASIC Chair Joe Longo emphasized the importance of the ruling, describing it as a landmark penalty for failing to provide a TMD. “Target market determinations are essential for preventing the inappropriate marketing of high-risk products to consumers,” Longo stated.
The court criticized Bit Trade’s actions, finding the company acted to maximize revenue without due regard for Australian corporate law until ASIC’s intervention. Justice Nicholas noted that even after becoming aware of regulatory requirements, the company continued to offer the product to retail clients, compounding its violations.
A Wake-Up Call for the Crypto Industry
This ruling comes amid heightened regulatory scrutiny on the crypto sector in Australia. ASIC has signaled its intention to hold digital asset firms accountable under existing laws, emphasizing that crypto products must be appropriately designed and marketed to protect consumers.
Longo warned, “Many products offered by crypto companies are already subject to current laws. Firms must prioritize compliance to avoid such penalties.”
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