Kraken's Australian operator was ordered by the Federal Court to pay a fine of $5.1 million AUD for offering financial services without the necessary regulatory clearances.
Reasons Behind the Fine
Kraken's 'margin extension' service permitted borrowing of funds for trading, repayable through digital assets like Bitcoin. However, the company failed to issue a Target Market Determination (TMD), breaching Australia's design and distribution obligations (DDO).
Consequences of Non-Compliance
ASIC Chair Joe Longo highlighted TMD's role in investor protection. Over 1,100 Kraken customers faced financial losses, some amounting to almost $4 million. The ruling sets a precedent for crypto platforms to adhere to regulations.
Kraken's Reaction to the Court's Decision
Kraken expressed disapproval of the ruling but does not plan to appeal. The company stated it intends to work with regulators to align industry needs with legal requirements.
Kraken's fine emphasizes the need for regulatory compliance in the cryptocurrency sector, signaling platforms to review and adjust operations due to increased scrutiny.
