Australia’s financial regulator has filed a civil lawsuit against a subsidiary of crypto exchange Kraken for allegedly failing to comply with regulations for its margin trading product.
The Australian Securities and Investments Commission (ASIC) alleges that Bit Trade, Kraken’s arm in the country, failed to make a “target market determination” for its margin product before offering it to consumers, as required by law.
The Australian government says a target market definition is a document “that describes the types of customers a product is suitable for, based on their likely needs, objectives and financial situation (target market), and sets out the distribution conditions and restrictions around how the product can be distributed to customers.”
ASIC states that Bit Trade’s margin trading product is a credit facility because the Kraken subsidiary offers customers credit for use in the sale and purchase of certain crypto assets.
The regulator notes that the exchange has been offering the product since the beginning of 2020. She claims the company has failed to comply with regulations that came into effect in October 2021, noting that at least 1,160 Australian customers used the margin trading product and lost an amount. a total of $12.95 million since then.
Says ASIC deputy chair Sarah Court,
“These proceedings should send a message to the crypto industry that products will be scrutinized by the ASIC to ensure they comply with legal obligations to protect consumers.”
San Francisco-based Kraken acquired Bit Trade in 2020.
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