Kraken Court Ruling in Australia

Cryptocurrency exchange Kraken cited the lack of regulatory clarity in Australia as the reason for a court ruling against its local operator, Bit Trade Pty Ltd, on Friday.

Background

Australia’s federal court ruled that Bit Trade failed to comply with Section 994B of the Corporations Act. This section mandates that issuers of financial products must make a “target market determination” before launching products for consumers.

According to the Australian Securities and Investments Commission (ASIC), Bit Trade’s margin extension product has been available since October 5, 2021, without the necessary target market assessment.

Kraken’s Response

Kraken stated it would comply with the court ruling regarding its margin offering. However, the exchange emphasized that the judgement highlights the ongoing ambiguity in the regulations governing cryptocurrency in Australia. A Kraken spokesperson commented, “This is an unsatisfactory position for Australian investors,” advocating for clearer legal guidelines for crypto and Web3 operations.

Court Findings

The court ruled that while a loan in traditional currency constituted a credit facility creating deferred debt, repayment of a digital asset was not considered the same. ASIC noted this as a victory, signaling that they will continue to monitor crypto firms to ensure compliance with regulations for consumer protection.

ASIC and Bit Trade have seven days to agree on declarations and injunctions, and ASIC plans to seek financial penalties against the local operator.