Australia’s crypto ecosystem is currently shaken by a major event: Bit Trade, the Australian subsidiary of cryptocurrency exchange Kraken, is under scrutiny by the Australian Securities and Investments Commission (ASIC). Bit Trade is accused of failing to comply with Australian regulations regarding the distribution and design of financial products.
Bit Trade in turmoil with Australian regulators
Bit Trade, the subsidiary of Kraken is currently in a delicate situation, facing lawsuits from the Australian Securities and Investments Commission (ASIC).
The main source of concern lies in the fact that Bit Trade failed to comply with an important procedure, according to ASIC. The subsidiary allegedly failed to adhere to regulations concerning its margin trading service.
In Australia, financial product providers must adhere to rigorous guidelines to ensure the appropriate design and suitability of their products in response to specific customer needs.
Since these obligations were introduced in 2021, ASIC revealed that Bit Trade‘s margin trading service has been adopted by over 1,160 Australian customers, increasing collective losses by approximately $8.35 million, equivalent to A$12.95 million. Despite a notification of non-compliance received in 2022, Bit Trade has not changed its conduct, according to the regulator.
ASIC’s Lawsuit Against Kraken Subsidiary, a Call to Compliance for Companies in the Sector?
The service offered by Bit Trade hasn’t gone unnoticed. It allows users to borrow up to five times the value of their assets as collateral. In practice, this is equivalent to a credit service enabling cryptocurrency trading on the Kraken platform. ASIC considers this type of product to be a form of credit facility.
The intervention of ASIC goes beyond the simple case of Bit Trade. Sarah Court, vice-president of ASIC, appeals to the entire cryptocurrency industry on the importance of strict compliance with Australian standards. She insists that consumer protection remains a central priority.
This is not the only measure taken by ASIC against cryptocurrency exchange platforms. Indeed, in July, this regulatory authority proceeded to a search of Binance’s premises, just a few months after revoking the platform’s license.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
