Crypto Exchange Kraken Fined in Australia

(Reuters) – Australia’s corporate watchdog reported that the federal court ordered Kraken’s local operator to pay an A$8 million ($5.1 million) fine for unlawfully issuing a credit facility to over 1,100 customers.

The Australian Securities and Investments Commission (ASIC) initiated civil proceedings last year against Bit Trade, the operator of the Kraken exchange in Australia, for non-compliance with rules concerning its margin trading product.

ASIC stated that Bit Trade failed to appropriately assess customers for the margin trading product, leading to losses exceeding $5 million.

"Bit Trade issued its margin extension product to over 1,100 Australians who were charged fees and interest of more than US$7 million without considering if the product was appropriate for them," ASIC noted in a statement.

Bit Trade's product allowed margin extensions, a form of credit, to be made and repaid in digital assets like Bitcoin or national currencies such as U.S. dollars.

The company expressed disappointment with the verdict. A Kraken spokesperson stated, "We believe these rulings significantly hamper growth in the Australian economy. We look forward to engaging constructively with policymakers and regulators as these rules are developed."

In August, the federal court concluded that the product qualified as a credit facility, as it permitted margin extensions in national currencies, necessitating a mandatory document called target market determinations to identify the suitable consumer class for the product.

This penalty marks the first case against an entity for failing to establish a target market determination, according to the regulator.

($1 = 1.5593 Australian dollars)