Kraken was fined in Australia

-

Kraken’s Australian branch, Bit Trade, has found itself in hot water after being slapped with $5.1 million fine for breaching financial laws.

Australian regulators are tightening the screws on companies that don’t play by their rules.

Release the Kraken

The Australian Securities and Investments Commission, the ASIC took action against Bit Trade for issuing margin trading products to over 1,100 customers without properly assessing whether these products were suitable for them.

Kraken
X

This is not the kind of news anyone wants to see while waiting for a holiday market rally.

The issue revolves around Bit Trade’s margin extension product, which practially acts like a loan, allowing customers to trade with more money than they actually have.

Unfortunately, this led to negative balances, to losses exceeding $5 million for some users because the company didn’t do the necessary checks to ensure these products fit their customers’ financial situations.

Pay the price

Originally, ASIC sought a $12.8 million penalty, but the court deemed that excessive and settled on $5.1 million instead.

Bit Trade had asked for a reduction to $2.5 million, but the judge felt that was too low.

Among those affected was an investor who lost nearly $4 million, prompting ASIC Chair Joe Longo to stress the importance of crypto firms adhering to regulations designed to protect consumers.

In its ruling, the Federal Court of Australia classified Bit Trade’s margin product as a credit facility, which means it should have followed specific regulations, including issuing a target market determination.

This is an official document that outlines which consumers are best suited for a financial product, and guess what? Bit Trade didn’t provide one.

Precedent rule?

This ruling is an important moment as it’s the first time such a fine has been handed down for failing to provide this public document. The company has been ordered to pay up within 60 days.

Kraken expressed disappointment over the ruling, suggesting that it could negatively impact Australia’s economy, but they remain committed to working with regulators and policymakers to ensure compliance moving forward.

Have you read it yet? New gold rush in El Salvador? And what about Bitcoin dreams?


Disclosure:This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Kriptoworld.com accepts no liability for any errors in the articles or for any financial loss resulting from incorrect information.

LATEST POSTS

Terraform Labs wants your claims, so don’t miss the deadline!

Ladies and gentlemen, hold onto your crypto wallets because Terraform Labs is back in the spotlight. Starting March 31, creditors who lost money in the...

New Fidelity stablecoin is coming?

The stablecoin market is on fire, and it's not just the usual suspects like Tether and Circle anymore. Fidelity Investments, one of the biggest asset...

Crusoe, from Bitcoin to AI

Alright, the tech world just got a whole lot more interesting. Crusoe Energy, the company that's been harnessing waste gas from oil fields to power...

Curve Finance founder’s selloff sparks market concerns

Alright, the crypto world is buzzing with a tale of intrigue and uncertainty. Michael Egorov, the mastermind behind Curve Finance, has been on a selling...

Most Popular

Guest posts