Bit Trade, Kraken’s Australian operator, found guilty of violating legal obligations on margin trading by Australian Federal Court.
Bit Trade, Kraken’s Australian operator, was found guilty of failing to satisfy legal obligations by the Australian Federal Court.
Bit Trade was convicted of failing to meet the target market determination requirement for its margin trading product, which it provided to customers. The decision suggests that the cryptocurrency sector is facing heightened regulatory pressures.
The cryptocurrency industry continues to be volatile. In the case submitted by the financial regulator ASIC against Kraken’s Australian operator Bit Trade Pty Ltd., the Australian Federal Court rendered a significant decision. Bit Trade was convicted of failing to fulfill its legal obligations in connection with its margin trading product.
The decision indicated that the target market determination requirement was not satisfied. The margin expansion product that Kraken provides to Australian customers has been available on the market since October 5, 2021.
Nevertheless, the TMD document, which is essential for determining the target market, was not included in the sale of this product. In accordance with section 994B(2) of the Australian Corporations Act, it is mandatory to ascertain the appropriate audience for the financial products in advance.
Prioritizing Consumer Protection
The legal obligation that has been specified is designed to guarantee that financial products are directed at the appropriate customer target.
The purpose of this is to mitigate prospective financial losses. ASIC contended that Bit Trade violated the law by failing to satisfy these prerequisites.
The decision has substantial ramifications. Consequently, the court’s ruling is regarded as a significant victory for ASIC. Sarah Court, the Deputy Chair of ASIC, declared, “Our regulatory pressures on the cryptocurrency sector will persist.” We will continue to monitor the compliance of products with legal obligations in order to safeguard consumers.
Bit Trade’s Future is Uncertain
Bit Trade and ASIC will reach an agreement on pronouncements and measures to be implemented within seven days of the court’s decision. In the future, ASIC intends to pursue financial penalties. Kraken, an Australian company, expressed its disappointment with the outcome, but it pledged to adhere to the court’s decision.
Legal regulations are becoming more prevalent in the cryptocurrency industry. The sector’s future remains uncertain due to the ongoing challenges of adapting to innovative technologies within the existing legal frameworks.
The necessity of global regulation of cryptocurrencies has once again become apparent, as evidenced by recent developments.
