The regulatory crypto crackdown and the deluge of litigation targeting the industry are not limited to the United States. Australian securities regulators have sued a crypto exchange providing services for Kraken in the country.
The Australian Securities and Investments Commission (ASIC) sued Bit Trade Pty Ltd on September 21, as reported.
Australian Crypto Crackdown?
Furthermore, Bit Trade is the provider of the Kraken crypto exchange to Australian customers.
The Australian securities regulator said it had initiated civil proceedings against the company for “failing to comply with design and distribution obligations for its margin trading product,” according to Reuters.
The design and distribution obligations require companies to design financial products that meet the needs of consumers and distribute them in a targeted manner.
ASIC claims the crypto exchange failed to create a “target market determination” for the product before launching it.
The margin trading product is a credit facility providing customers credit to buy and sell certain crypto assets on Kraken.
According to the regulator, customers can receive an extension of credit of up to five times the value of the assets they use as collateral.
Moreover, it added that at least 1,160 customers had used the margin trading product. These incurred a total loss of about $US8.35 million since the product was launched in October 2021.
The report added that ASIC is seeking declarations, pecuniary penalties, and injunctions prohibiting Bit Trade’s ongoing conduct.
Additionally, ASIC Deputy Chair Sarah Court said:
“These proceedings should send a message to the crypto industry that products will continue to be scrutinised by ASIC to ensure they comply with regulatory obligations in order to protect consumers,”
Speaking to the AFR, Kraken’s local managing director Jonathon Miller said:
“We are both surprised and disappointed to have received today’s enforcement action. We believe this product is offered in compliance with Australian law, and will continue our efforts to receive clarity on this matter.”
No Clear Regulations Down Under Yet
In related news, the embattled Hong Kong crypto exchange JPEX has applied for deregistration in Australia. Hong Kong regulators cracked down on JPEX earlier this month, arresting employees with charges of fraud for operating an unlicensed crypto exchange.
In July, ASIC canceled FTX Australia’s license, prohibiting its operations as a crypto exchange and impacting 30,000 customers at the time.
Crypto exchanges operating in Australia include Kraken, BTC Markets, Swyftx, and Coinbase. Moreover, they are still waiting for the government to introduce regulations to govern the sector.
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