In a 23 August 2024 media statement, the Australian Securities and Investments Commission (ASIC) announced that the Australian Federal Court ruled that Bit Trade Pty Ltd. failed to comply with design and distribution regulations.
ASIC Wins Its Case Against Bit Trade
This company runs the Kraken crypto exchange in Australia. ASIC indicated that Bit Trade’s “margin extension” product has been available since October 2021 without a “target market determination” as legally required.
According to the financial watchdog, this oversight meant a contravention of the Corporations Act every time this product was offered to a customer on the Kraken exchange. The ASIC deputy chair, Sarah Court, commented:
This is a significant outcome for ASIC involving a major global crypto firm. We initiated proceedings to send a message to the crypto industry that we will continue to scrutinise products to ensure they comply with regulatory obligations in order to protect consumers.
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The Australian design and distribution obligations came into effect on 5 October 2021. These rules oblige companies to tailor financial products in line with customer needs and to distribute them in a “targeted manner”.
Court went on to say that this court ruling is a “salient reminder to the crypto industry” to comply with these regulations. She added:
Consumers should receive the full protection of the law when dealing in crypto-asset products and we will continue to take action to ensure this happens.
Bit Trade’s product allowed for margin extensions and repayment in either digital assets, such as Bitcoin, or fiat currencies such as US dollars. ASIC alleged that this repayment obligation was a deferred debt, making the product a credit facility. The regulator will seek financial penalties against Bit Trade.
