Australia’s Federal Court has ordered Bit Trade, the local operator of cryptocurrency exchange Kraken, to pay an A$8 million ($5.1 million) fine for unlawfully offering a credit facility to more than 1,100 customers, the Australian Securities and Investments Commission announced on Thursday.
The penalty follows civil proceedings initiated by ASIC last year, alleging Bit Trade’s margin trading product violated regulatory requirements. The watchdog stated that the company failed to assess whether the product was suitable for its users, leading to customer losses exceeding $5 million.
“Bit Trade issued its margin extension product to over 1,100 Australians, who were charged fees and interest of more than $7 million, without considering if the product was appropriate for them,” ASIC said in a statement.
The margin extension product allowed customers to obtain loans or credit in digital assets like bitcoin or in fiat currencies such as the U.S. dollar.
In August, the Federal Court ruled that the margin extension product qualified as a credit facility, which required a target market determination—a document outlining the intended customer base for the product. This case marks the first penalty for failing to comply with such a requirement, ASIC noted.
A Kraken spokesperson expressed disappointment with the court’s decision, stating, “We believe these rulings significantly hamper growth in the Australian economy. We look forward to engaging constructively with policymakers and regulators as these rules are developed.”
