Bit Trade, the operator of the Kraken crypto exchange, has been fined 8 million AUD by the Australian Securities and Investments Commission (ASIC) for providing illegal credit services to customers.
Fine Details and Reasons
In October 2021, Bit Trade introduced a product allowing repayments in cryptocurrencies like Bitcoin or traditional currencies such as USD. This product was marketed without the required target market determination, an essential regulatory measure. As a result, customers incurred fees and losses amounting to millions of dollars. One investor reportedly lost nearly 4 million dollars.
Court Ruling and Implications
The Federal Court found that Bit Trade breached Australian regulations by not creating a target market determination. ASIC Chair Joe Longo called the ruling a significant outcome, being the first penalty for failing to have a Target Market Determination. In addition to the hefty fine, Bit Trade was ordered to cover ASIC’s legal expenses.
Cryptocurrency Market Regulation
This court case comes amidst ASIC increasing its oversight of the cryptocurrency market. On December 4, ASIC released Consultation Paper 381, proposing to apply existing financial product definitions to cryptocurrencies and address licensing issues for stablecoins and wrapped tokens.
The fine against Bit Trade highlights the growing importance of regulation in the crypto industry and urges companies to prioritize compliance.
