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Australia’s Federal Court has ruled against <a href="https://thecoinrise.com/kraken-acquires-bit-trade-one-of-australias-largest-crypto-exchanges/" rel="noopener noreferrer nofollow">Bit Trade, the operator of Kraken’s crypto exchange in Australia</a>, siding with the Australian Securities and Investments Commission (ASIC). The court determined that Bit Trade failed to comply with key financial regulations, including design and distribution obligations, and operated as an unlicensed credit facility.
The legal battle began in September 2023 when ASIC filed a civil suit against Bit Trade, alleging that the company’s margin trading product was launched without adhering to required target market determinations.
<h2 id="span-style-font-weight-400-judge-ruling-details-span">Judge Ruling Details</h2>
In his ruling on August 23, Justice John Nicholas <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2024/2024fca0953" rel="noopener noreferrer nofollow">concluded</a> that Bit Trade had indeed breached Australian law by offering its margin trading product to retail clients without first establishing a target market determination. This violation of the design and distribution obligations, which are mandated by Australian law for all financial products, was a central issue in the case.
ASIC also argued that Bit Trade’s margin trading product functioned as a credit facility because it allowed customers to receive an extension of credit up to five times the value of their collateral. Justice Nicholas agreed with this assessment, stating that the margin extension created a “deferred debt” for customers, which qualified the product as a credit facility under Australian regulations.
Following the <a href="https://x.com/asicmedia/status/1826826977229017469" rel="noopener noreferrer nofollow">ruling</a>, ASIC and Bit Trade have been given a week to finalize declarations and injunctions. ASIC has indicated that it will seek financial penalties against Bit Trade as a result of this case.
<h2 id="span-style-font-weight-400-asic-deputy-chair-highlights-broader-implications-span">ASIC Deputy Chair Highlights Broader Implications</h2>
Responding to the court’s decision, ASIC Deputy Chair Sarah Court <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-186mr-asic-wins-case-against-kraken-crypto-exchange-operator-for-design-and-distribution-failure/?altTemplate=betanewsroom" rel="noopener noreferrer nofollow">emphasized</a> the broader implications for the cryptocurrency industry in Australia. “Today’s outcome sends a salient reminder to the crypto industry about the importance of compliance with the design and distribution obligations,” she said.
<a href="https://thecoinrise.com/kraken-review-2022-cryptocurrency-exchange-reviews/" rel="noopener noreferrer nofollow">Kraken</a>, while expressing disappointment with the ruling, has indicated its readiness to comply with the regulatory obligations imposed by the court. This case highlights the increasing scrutiny on cryptocurrency exchanges in countries like Australia.
<h3 id="span-style-font-weight-400-kraken-s-global-expansion-span">Kraken’s Global Expansion</h3>
Despite this setback, Kraken continues to expand its services globally. In July, Kraken Institutional announced the expansion of its <a href="https://thecoinrise.com/kraken-institutional-expands-kraken-custody-services-to-uk-and-australia/" rel="noopener noreferrer nofollow">Kraken Custody services to institutional clients in the UK and Australia</a>, aiming to meet the growing demand from hedge funds and exchange-traded fund issuers for secure digital asset management solutions.
The post <a href="https://thecoinrise.com/australian-court-rules-against-krakens-bit-trade-in-asic-compliance-case/" rel="noopener noreferrer nofollow">Australian Court Rules Against Kraken’s Bit Trade in ASIC Compliance Case</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">TheCoinrise.com</a>.

Australian Court Rules Against Kraken’s Bit Trade in ASIC Compliance Case

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