Bit Trade, the provider of Kraken’s crypto exchange services in Australia, is facing legal action by the Australian Securities and Investments Commission (ASIC) in a surprising turn of events. ASIC has accused Bit Trade of breaching its design and distribution obligations related to one of its trading products.
ASIC, the Australian financial regulator, released a statement on September 21. In this statement, they accused Bit Trade of neglecting to conduct a target market assessment before offering their margin trading product to customers within Australia.
The obligations of Australian financial product providers include designing and distributing their products according to specific requirements. These obligations compel firms to develop products that meet customer needs and adopt a targeted distribution strategy.
According to the regulator, Bit Trade’s margin trading product has been experiencing significant losses. Since introducing design and distribution obligations in October 2021, over 1,160 Australian customers have engaged with the product. These customers have suffered losses of approximately $8.35 million (12.95 million Australian dollars).
However, ASIC notified Bit Trade in June 2022 about its failure to meet obligations, but claims suggest that Bit Trade continued offering the product without fulfilling the requirements.
Kraken’s Crypto Operations In Australia Respond To ASIC’s Regulatory Actions
The managing director of Kraken’s Australian operations, Jonathan Miller, was taken aback by ASIC’s unexpected action. He firmly believed that the product fully complied with local obligations.
Miller confirmed that continuous efforts have been made to engage constructively with ASIC regarding this issue. The primary objective is to ensure compliance of our product, which operates as a registered Digital Currency Exchange under AUSTRAC.
Therefore, both astonishment and dismay arise within us due to the actions taken today. We firmly hold on to our belief that this particular product aligns perfectly with Australian law, and we shall persistently seek further clarification.
Bit Trade provides a “margin extension” service that allows customers to receive credit extensions. These extensions can be up to five times the value of their collateral assets. The financial regulator classifies this service as a “credit facility” that enables customers to trade specific crypto assets on Kraken exchange by providing them with credit.
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ASIC’s deputy chair, Sarah Court, stressed the importance of these proceedings in serving as a timely reminder for the cryptocurrency industry. However, regulatory bodies will continue to diligently examine < UNK> financial products, ensuring strict adherence < UNK> to consumer protection laws within our country.
“ASIC’s actions highlight the importance of complying with design and distribution obligations, ensuring that financial products reach consumers properly.”
“The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.”
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