Kraken Subsidiary Bit Trade Sued by Australian Regulator ASIC


The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Bit Trade, the operator of the Kraken cryptocurrency exchange in Australia, for allegedly failing to comply with design and distribution obligations for one of its trading products.

Bit Trade allegedly neglected to establish a target market determination before offering its margin trading product to Australian clients. Since the implementation of these design and distribution obligations in October 2021, Bit Trade’s margin trading product has been used by at least 1160 Australian customers for losing a collective $8.35 million (12.95 million Australian dollars).

Bit Trade received notification of its non-compliance in June 2022 but continued offering the product without fulfilling the necessary determinations. The product functions as a “margin extension” service, granting customers credit extensions of up to five times the value of the assets they employ as collateral, effectively qualifying as a “credit facility.”

ASIC’s deputy chair, Sarah Court, emphasized that these proceedings should serve as a reminder to the crypto industry that financial products will continue to undergo scrutiny by regulators to ensure compliance with consumer protection laws in Australia. She stated, “ASIC’s actions underscore the importance of complying with design and distribution obligations to ensure that financial products are distributed to consumers in a responsible manner.”

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