Australian court finds Kraken's operator non-compliant with financial product regulations since Oct 2021.
ASIC targets Bit Trade for lacking crucial target market determination in crypto margin trading.
Kraken vows compliance enhancement following Australian Federal Court's regulatory ruling.
The Federal Court of Australia ruled against Bit Trade Pty Ltd, the operator of the Kraken cryptocurrency exchange, for failing to meet necessary design and distribution requirements.
Bit Trade violated the Corporations Act section s994B(2) by offering a margin trading product without a requisite target market determination since October 2021. The absence of this crucial compliance document, which outlines suitable consumers for financial products, formed the basis of ASIC’s legal action initiated in September 2023.
https://twitter.com/asicmedia/status/1826826977229017469 Importance of Target Market Determinations
The court's findings underscore the mandatory nature of target market determinations in financial product offerings. These documents are vital as they ensure that financial products are designed and distributed to meet the specific needs of their intended consumer base, thereby safeguarding consumer interests and maintaining market integrity.
ASIC’s Deputy Chair, Sarah Court, emphasized the ruling's role in reinforcing legal standards within the crypto market. She stated that this outcome should serve as a clear reminder to all crypto service providers about the critical importance of compliance with regulatory frameworks aimed at consumer protection.
Bit Trade’s Response and Future Compliance
Despite the unfavorable ruling, a spokesperson from Kraken expressed the company's readiness to align with the court’s directives and enhance their compliance strategies moving forward. This proactive stance is anticipated to foster a more responsible and consumer-focused approach to offering crypto financial products in Australia.
Further proceedings are expected as ASIC and Bit Trade deliberate on declarations and injunctions. The regulator also plans to pursue financial penalties, emphasizing its commitment to rigorously enforcing compliance standards.
This court decision is part of a broader regulatory scrutiny on crypto businesses globally. Similar actions have been seen in other jurisdictions, such as the November 2023 lawsuit by the U.S. Securities and Exchange Commission against Kraken for operating without proper registration. These legal challenges highlight the increasing focus on compliance within the crypto sector as authorities strive to integrate consumer protection laws with the dynamic nature of digital financial services.
The post ASIC Wins Legal Battle Against Kraken’s Australian Operator Over Compliance Failures appeared first on Crypto News Land.