Federal Court Ruling on Bit Trade

The Federal Court of Australia ruled that Bit Trade, the operating firm of Kraken crypto exchange, must pay eight million Australian dollars ($5.1 million) for failing to comply with regulatory obligations.

This penalty follows the August court ruling in favor of the Australian Securities and Investments Commission (ASIC) during its civil proceedings against Bit Trade. The regulator accused the company of issuing a credit facility without a license.

Details of the Ruling

ASIC stated that Bit Trade failed to make the target market determination before offering its margin extension product to over 1,100 customers between October 2021 and August 2023, resulting in losses exceeding $5.2 million.

Originally, ASIC requested a penalty of A$20 million against Bit Trade, while the company contended it should be limited to A$4 million.

A Kraken spokesperson mentioned, "We appreciate that the Court recognized our compliance efforts, but are disappointed with the outcome of this case. 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."

In response to the initial court ruling in August, Kraken noted that the judgment reflects the lack of clarity in Australia’s crypto regulations. Conversely, ASIC Deputy Chair Sarah Court stated that the regulator will continue to scrutinize crypto products to ensure compliance for investor protection.

The court ordered Bit Trade to pay the fine within 60 days and cover ASIC’s legal costs.