Australian Regulator ASIC Launches Civil Proceedings Against Crypto Exchange Bit Trade for Compliance Failures
Summary:
The Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings against Bit Trade, the provider of the Kraken crypto exchange in Australia, alleging their failure to comply with design and distribution obligations for a trading product. The ASIC claims that Bit Trade did not make a target market determination before offering its margin trading product. Since October 2021, at least 1160 Australian customers have reportedly incurred a total loss of approximately $12.95 million through this product. ASIC Deputy Chair, Sarah Court, warns the crypto industry about continued scrutiny to ensure regulatory compliance.
Initiating civil penalty proceedings, the Australian Securities and Investments Commission (ASIC) is holding Bit Trade accountable, the entity responsible for introducing Kraken, a crypto exchange to Australia. This is attributed to infringement of design and distribution obligations tied to one of its investment products. A news release on Sept. 21 by ASIC proclaims that Bit Trade, the official provider for the US-based crypto exchange Kraken, failed to establish a target market analysis prior to the launch of its margin trading product to Australian clientele. Financial corporations offering products and services in Australia are legally obligated to abide by the design and distribution duties. These obligations dictate establishments to manufacture investment products in alignment with pre-defined customer needs and launch them under a meticulously devised plan. ASIC's statement affirms the allegations against Bit Trade, stating that its margin trading product is equivalent to a credit facility, as it facilitates customer credit for executing sale and purchase transactions of specific crypto assets via the Kraken exchange. Since January 2020, Bit Trade has been offering its margin trading product to Australians through the Kraken platform, states ASIC. Additionally, the regulator also points out that starting from the inception of the design and distribution obligations in October 2021, a minimum of 1160 Australian customers have utilized Bit Trade's margin trading product, culminating in a collective loss of nearly $12.95 million. ASIC’s deputy chair, Sarah Court, warns the crypto sector that their products will invariably be under ASIC’s hardened scrutiny to safeguard consumer interests and ensure adherence to regulatory norms. The story is still unfolding, with future updates to follow as more information is unearthed.
Published At
9/21/2023 2:13:53 AM
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