The Australian Securities and Investments Commission (ASIC) has fined Bit Trade, the operator behind the Kraken exchange, AUD 8 million ($5 million) for issuing a credit facility illegally. This is following a federal court decision that found the company to be in breach of regulatory obligations. Bit Trade had offered a “margin extension” product to 1,100 Australian customers, which provided extended trading limits and enabled repayments in Bitcoin or traditional fiat currencies.
However, this product was deemed to be a credit facility that required a target market determination (TMD) under Australia’s design and distribution obligations (DDO). Bit Trade failed to meet this requirement, leading to significant compliance violations. The company collected more than AUD 8 million ($5 million) in fees and interest but trading losses exceeded AUD 5 million ($3.2 million), with one investor reportedly losing over AUD 3 million ($2 million).
ASIC Chair Joe Longo emphasized that TMDs are vital for safeguarding consumers and ensuring financial products are marketed responsibly, warning other firms about the consequences of neglecting compliance.
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