Bit Trade, the Australian subsidiary of crypto exchange Kraken, has been fined $5.1 million. The Australian Federal Court accused the exchange of opening its leveraged trading service without determining the target market as required by law.
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New legal setback for Kraken in Australia
In a judgment handed down on December 12 by the Australian Federal Court, the Australian subsidiary of Kraken, Bit Trade, was fined 8 million Australian dollars ($5.1 million). The crypto exchange will also have to pay legal costs.
Kraken sentenced in Australia follows a complaint from the Australian Securities and Investments Commission (ASIC). The country’s business watchdog accused the exchange of allowing leveraged trading on its platform without determining the target market as required by Australian law. Over 1,100 Australians used Kraken’s product, spending over $7 million in fees and interest. ASIC estimates that over $5 million was lost.
ASIC demanded a $12.8 million fine against Kraken. For its part, the exchange was prepared to pay a fine of $2.5 million for its breach. In his order, Judge John Nicholas opted for an interim fine of $8 million. In particular, he said he was convinced that Bit Trade were serious and motivated by the desire to maximize revenue.
Reactions of the parties to the trial
The announcement of Kraken’s $5.1 million sentence was commented on by the parties to the trial. In a public statement, ASIC called Kraken’s conviction a “significant result”. For Joe Longo, ASIC president, this ruling is a reminder to crypto companies to heed their regulatory compliance obligations.
Target market determinations are fundamental to ensuring that investors are not offered inappropriately marketed products that could harm them. This is a significant result, ASIC’s first sanction against an entity for failure to have a TMD.
Joe Longo, ASIC President.
For his part, Kraken gave a negative response to the judgment of the Federal Court of Australia. Responding to our colleagues at Cointelegraph, a spokesman for the exchange expressed his disappointment at the outcome. In particular, he believes that this decision hinders the country’s economic growth and reminds us of the urgent need for clear legislation of the crypto ecosystem in Australia to avoid confusion.
We believe this case highlights the urgent need for bespoke cryptocurrency legislation to address the gaps that are causing confusion and uncertainty for Australian cryptocurrency investors and businesses.
Kraken
Kraken is no stranger to exorbitant fines. In February 2023 in the USA, the exchange was forced to pay $30 million in fines for setting up a staking service without prior SEC registration. Australia, for its part, has a dynamic crypto ecosystem. Police officer misappropriates seized bitcoins, crypto ban in casinos, search of Binance premises; Australia is often in the news, for good or ill...
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