Australian Regulator Pursues Legal Action
The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Bit Trade Pty Ltd, Kraken Crypto Exchange’s Australian provider.
The claim, as stated on Sept. 21, centers around Bit Trade’s alleged breach of financial regulations, reportedly causing a staggering loss of $12.95 million for Australian consumers.
Margin Trading at the Core of the Dispute
The focus of the lawsuit revolves around Bit Trade’s margin trading product. ASIC is steadfast in its belief that the product failed to align with the design and distribution mandates set by Australian law. They stress that Bit Trade did not adequately define a target audience before offering it to the Australian populace.
The exchange presents the offering as a “margin extension,” allowing users to amplify their holdings up to five times. This product has been in the market since 2020.
ASIC shed light on its prior interactions with Bit Trade in 2022, pinpointing its reservations. Despite ASIC’s reservations, Bit Trade persisted with its offerings without taking into account the regulator’s feedback.
ASIC’s Warning Signal to Crypto Industry
Sarah Court, ASIC’s Deputy Chair, enunciated that this legal move aims to be a clarion call for cryptocurrency enterprises to strictly abide by Australia’s financial statutes.
Kraken Australia’s Counter
Jonathon Miller, spearheading Kraken Australia, conveyed his distress concerning the regulatory move. He underscored the firm’s belief in their compliance with Australian rules.
This legal endeavor by ASIC is not isolated. It mirrors a broader pattern of intensifying regulatory oversight in the realm of cryptocurrency.
In an earlier episode this year, ASIC also disbarred FTX Australia, underscoring its dedication to formulating a robust regulatory scaffold.
Traditional Banking Stance
In related developments, conventional financial behemoths like Westpac and National Australia Bank have rolled out mechanisms to curb payments directed at cryptocurrency exchanges. This move is strategized to limit customer vulnerability to the lurking hazards and potential fraudulent schemes in the cryptoverse.