Aussie Operator of Kraken Sued over Design and Distribution Failures

Aussie Operator of Kraken Sued over Design and Distribution Failures

The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against Bit Trade Pty Ltd, which operates the Kraken crypto exchange in Australia, for violating the design and distribution obligations for the margin trading product. The amount of the fine has not been revealed.

ASIC Sues Operator of Kraken

Announced today (Thursday), the Aussie regulator highlighted that the company failed to make the mandated target market determination for the product it offered in the country. Although ASIC notified the firm of the failure in June 2022, it continued the offerings without a target market determination.

According to the Australian watchdog, Bit Trade’s margin trading product is a credit facility. The exchange offers customers credit for use in the sale and purchase of cryptocurrencies, which it calls 'margin extension’. Kraken customers can use this extension to receive credit up to five times the value of the collateral asset.

Bit Trade, a subsidiary of Payward, has been offering margin trading products since January 2020. The regulator highlighted that since the commencement of its design and distribution obligation, at least 1160 Australian customers of Kraken used the margin trading product, losing about AU$12.95 million.

„These proceedings should send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they comply with regulatory obligations in order to protect consumers,” said the Deputy Chair at ASIC, Sarah Court.

„ASIC’s action should be a reminder of the importance to comply with the design and distribution obligations so that financial products are distributed to consumers appropriately.”

Mandatory Obligations

ASIC introduced the design and distribution obligations in October 2021 to protect the interest of the retail customers. The regulator came down with a heavy hand against the companies and platforms violating the new rules.

Earlier, ASIC sued eToro for breaching the design and distribution obligations with its contracts for differences (CFDs) offerings to Aussie investors. The Aussie regulator additionally issued stop orders against other CFDs brokers, including Saxo Capital Markets and Mitrade.

Recently, the regulator revealed its intentions to further tighten the design and distribution rules for the financial services providers.

Kraken’s Response

Bit Trade operates in Australia with an AUSTRAC registration. Following ASIC’s action, the company’s Managing Director, Jonathon Miller, revealed to Cointelegraph that they were „attempting to constructively engage with ASIC on this matter for some time.”

„We are, therefore, 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,” he added.

This article was written by Arnab Shome at www.financemagnates.com.

About Post Author

admin

https://albedo100.pl/ | Szamba betonowe Muszyna | przegrywanie kaset wszystkie formaty na terenie całej polski przegrywanie kaset vhs w polsce przegrywamy wszystkie formaty swiata | agdchrosciel | otherlife Katalog firm Baza przychodni weterynaryjnych Katalog stron PEKSI WP web site Katalog stron Osuszanie Wodzisław Śląski Internetowy sklep zoologiczny