Admin Source : Gadgets 360
Australia has been tightening its regulatory oversight across various sectors. In the latest development, the country has imposed a $5.1 million fine (roughly Rs. 43 crores or AUD 8 million) on Kraken, the US-based crypto exchange. Kraken operates in Australia through the digital currency platform Bit Trade, which has been instructed by authorities to pay the penalty within 60 days.
The case against Bit Trade and subsequently Kraken, has been filed by the Australian Securities and Investment Commission (ASIC), an official document from Australia’s federal court showed.
In a separate blog post detailing the issue, the ASIC said that Bit Trade was in violations of obligations around design and distribution of its products – while also having offered credit services without completing the legal formalities and obtaining required licences.
“In August this year, the Federal Court found that Bit Trade’s product was a credit facility and required a TMD (target market determinations) as the product offered margin extensions in national currencies. As a result, the company breached its design and distribution obligations (DDO) each time it offered the margin extension product to a customer without the required TMD,” the blog explained.
According to Joe Longo, chairperson of the ASIC, protecting investors from exposure to improperly marketed products is a top priority. The blog also revealed that over 1,100 Australian citizens were issued Bit Trade’s margin extension product, through which the platform generated $7 million (roughly Rs. 59.4 crore) in fees and interest, as claimed by the ASIC.
“Those customers Bit Trade targeted suffered trading losses of more than $5 million (roughly Rs. 42.2 lakh), including one investor who lost almost $4 million (roughly Rs. 33.9 lakh),” the blog flagged.
Speaking to CoinTelegraph, Kraken said that it is disappointed with this outcome and sees it as a hindrance against growth in the continent.
“We believe this case highlights the urgent need for bespoke crypto legislation to address the shortcomings that are causing confusion and uncertainty for Australian crypto investors and businesses,” the report cited a Kraken spokesperson as saying.
Australian authorities are concerned that such practices by prominent Web3 firms highlight significant deficiencies in the compliance system. The ASIC has called for feedback from the Web3 sector on potential policy adjustments and guidance that could benefit the industry while safeguarding individuals from financial risks.
