The Federal Court of Australia has ordered Bit Trade, the operating firm behind Kraken’s Australian crypto exchange, to pay a penalty of 8 million AUD (approximately $5.1 million) for failing to comply with regulatory requirements.
Background and Violations
The ruling follows a legal case brought by the Australian Securities and Investments Commission (ASIC), which accused Bit Trade of offering a margin trading product without proper authorization. Between October 2021 and August 2023, Bit Trade allegedly failed to conduct a target market determination before offering its margin extension product to over 1,100 customers. This oversight reportedly resulted in customer losses exceeding $5.2 million.
ASIC argued that Bit Trade’s actions violated Australian financial laws and initially sought a penalty of 20 million AUD. Bit Trade contended that any fine should not exceed 4 million AUD, but the court ultimately settled on the 8 million AUD penalty.
Reactions to the Ruling
Kraken expressed disappointment with the outcome, highlighting the challenges posed by unclear regulatory frameworks for crypto businesses in Australia. A Kraken spokesperson stated, “We appreciate the Court recognized our compliance efforts but believe this case underscores the urgent need for tailored crypto legislation to eliminate confusion and uncertainty for investors and businesses.”
ASIC Deputy Chair Sarah Court emphasized the regulator’s commitment to holding crypto firms accountable, saying the decision demonstrates the importance of ensuring compliance to protect investors.
Next Steps
The court has ordered Bit Trade to pay the fine within 60 days and cover ASIC’s legal costs. Kraken noted that the judgment reflects the regulatory ambiguity in Australia and reiterated its call for more precise crypto legislation.
This case adds to the ongoing global discussion about the need for clear regulatory standards in the rapidly evolving cryptocurrency industry.
