Key Takeaways:
- $5M Fine for Kraken Operator: Bit Trade, the Australian operator of Kraken, was fined 8 million AUD ($5.1M) for breaching financial regulations, including operating as an unlicensed credit facility.
- ASIC’s First TMD Penalty: The case marked ASIC’s first enforcement action over violations of target market determination (TMD) rules, with investors reportedly losing over $5M.
- Court Critiques Non-Compliance: The Federal Court criticized Bit Trade’s revenue-driven motives and disregard for legal obligations, despite warnings from ASIC.
An Australian court has fined Bit Trade, the operator of Kraken Australia, 8 million Australian dollars (approximately $5.1 million) for financial regulation breaches.
The Federal Court found Bit Trade guilty of failing to comply with design and distribution obligations (DDO) and operating as a credit facility without a license.
Legal proceedings launched by ASIC have seen the Australian operator of the Kraken crypto exchange ordered to pay $8 million for unlawfully issuing a credit facility to more than 1,100 Australian customers https://t.co/YH8A4QRMTH pic.twitter.com/nB16fnTMmg
— ASIC Media (@asicmedia) December 12, 2024
Justice John Nicholas issued the ruling on December 12, requiring the fine to be paid within 60 days, along with covering court costs.
The penalty exceeded Bit Trade’s proposed $2.5 million but was less than the $12.8 million sought by the Australian Securities and Investments Commission (ASIC).
The case centered on Kraken’s margin trading product, which lacked the legally required target market determination (TMD).
ASIC argued this oversight harmed over 1,100 Australian users, who collectively paid $7 million in fees and suffered $5 million in losses, including one individual who lost nearly $4 million.
💰🇦🇺 Australia fines Kraken operator $5.1M for regulatory breach
— PiQ (@PiQSuite) December 12, 2024
Tickers of interest: $BTC
Australia's ASIC imposed a $5.1 million fine on Kraken's local operator, Bit Trade, for unlawfully offering margin trading without determining suitable customers.
The violation affected… pic.twitter.com/zKlu9ekhZE
Justice Nicholas criticized Bit Trade’s revenue-driven motives and failure to comply despite ASIC’s warnings.
This decision marks ASIC’s first penalty for a TMD violation.
Kraken expressed disappointment but emphasized the need for clearer crypto regulations in Australia.
ASIC Chair Joe Longo reiterated that crypto firms must prioritize compliance, signaling increased enforcement against regulatory breaches in the industry.
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