Australia’s federal court has ruled in favor of the Australian Securities and Investments Commission (ASIC) in its case against Bit Trade, the Australian operator of Kraken’s crypto exchange.
The court determined that Bit Trade failed to meet design and distribution obligations and operated as a credit facility without proper licensing.
In September 2023, ASIC filed a civil suit against Bit Trade, alleging that its margin trading product lacked a target market determination specifying appropriate customers. Justice John Nicholas, in his August 23 judgment, found that Bit Trade breached legal requirements by issuing the product to retail clients without such a determination.
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Australian law mandates design and distribution obligations for financial products, requiring firms to tailor products to meet customers’ needs and distribute them through targeted plans.
ASIC also argued that Bit Trade’s product, which allowed customers to receive credit up to five times the value of their collateral, functioned as a credit facility in breach of regulations. Justice Nicholas noted that providing a margin extension creates a deferred debt payable when the customer is no longer eligible for the extension, thus classifying the product as a credit facility.
ASIC and Bit Trade have seven days to agree on declarations and injunctions, with ASIC indicating its intent to seek financial penalties.
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Kraken, which acquired Bit Trade in 2020, expressed disappointment with the ruling but committed to complying with the court’s decision. Kraken’s spokesperson acknowledged the complexity of applying existing regulations to new technologies and welcomed the court’s recognition of these challenges.
Cre: cointelegraph.
I’m Jessi Lee, currently living in Singapore. I am currently working as a trader for AZCoin company, with 5 years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
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