Stephen Katte2 hours agoAustralian regulator claims win over Kraken’s Bit Trade in federal court A court has found Bit Trade offered a product without following design and distribution obligations and acted as a credit facility, in violation of Australian laws. 680 Total views15 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTCOINTELEGRAPH IN YOUR SOCIAL FEEDFollow ourSubscribe onAustralia’s federal court has ruled in favor of the country’s financial regulator, ASIC, against Bit Trade, the operator of Kraken’s crypto exchange in Australia.
The court found that Bit Trade failed to comply with design and distribution obligations and acted as a credit facility without a license.
In September 2023, the Australian Securities and Investments Commission (ASIC) initiated a civil suit against Bit Trade, arguing that its margin trading product was launched without a target market determination outlining the appropriate customers.Source:Australian Securities and Investments Commission
In his Aug. 23 judgment, Justice John Nicholas found that by “issuing the Product to retail clients without having first made a target market determination for the Product,” Bit Trade violated these legal requirements.
Design and distribution obligations are required by law to offer financial products in Australia. They have specific requirements for firms to design products to meet the pre-determined needs of customers and then distribute them through a targeted plan.
At the same time, ASIC argued that because Bit Trade’s product allowed customers to receive an extension of credit up to five times the value of the assets they used as collateral, it was operating as a credit facility in violation of regulations.
Related:ASX sued over prior statements about its now-abandoned blockchain project
“The provision of a Margin Extension in national currency, including in Australian or U.S. dollars, gives rise to a ‘deferred debt’ which is incurred by the customer when they are provided with the Margin Extension,” Justice Nicholas said in his judgment.
It then “becomes payable upon the customer ceasing to be eligible to receive the Margin Extension. It follows that the Product is a credit facility.”
ASIC and Bit Trade have been given seven days to agree on declarations and injunctions. ASIC has said it will seek financial penalties against Bit Trade.Kraken disappointed but ready to comply
ASIC Deputy Chair Sarah Court said this case sends a message to the crypto industry to “comply with regulatory obligations” while operating in Australia.
“Today’s outcome sends a salient reminder to the crypto industry about the importance of compliance with the design and distribution obligations,” she said.
“It is a legal requirement for financial products to be distributed to consumers appropriately.” Source:Bit Trade
In a statement to Cointelegraph, a Kraken spokesperson said that while they were “disappointed by today’s ruling,” they are fully “prepared and willing to comply with the court’s decision.”
"Today’s ruling is another reminder of how cryptoassets are a novel technology,” the spokesperson said.
“We’re pleased the judge understood the nuances in this case, and recognized the challenges in applying existing regulatory frameworks to innovative technologies.”
In 2020, US-based crypto exchange Kraken acquired Australia"s oldest crypto exchange, Bit Trade, acquiring its license to operate in Australia.
Magazine:Bitcoin miners steamrolled after electricity thefts, exchange ‘closure’ scam: Asia Express# Bitcoin# Cryptocurrency Exchange# RegulationAdd reaction