Australia’s Corporate Watchdog Slaps $5.1m Fine on Kraken Operator for Unlawful Credit Facility
Australia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), has ordered Bit Trade, the local operator of the cryptocurrency exchange Kraken, to pay a fine of A$8 million ($5.1 million) for issuing an unlawful credit facility to over 1,100 customers.
According to ASIC, Bit Trade failed to determine whether its margin trading product was appropriate for customers, resulting in losses of more than $5 million. The company’s product allowed for margin extensions, a form of credit or loan, to be made and repaid in either digital assets like bitcoin or national currencies such as US dollars.
ASIC said that Bit Trade issued the product to over 1,100 Australians who were charged fees and interest of more than $7 million without considering if the product was suitable for them. A target market determination, a mandatory public document, was not provided, as required, which explains which class of consumer would be best suited for the product.
The penalty marks the first instance of an entity being fined for failing to have a target market determination. A spokesperson for Kraken expressed disappointment with the outcome, stating that the ruling hampers growth in the Australian economy and the company will engage constructively with policymakers and regulators as the rules are developed.