ASIC Initiates Civil Proceedings Against Bit Trade for Alleged Compliance Failures
Australia's regulatory body, the Australian Securities and Investments Commission (ASIC), has initiated legal proceedings against Bit Trade Pty Ltd, the provider of the Kraken cryptocurrency exchange for Australian users, for breaching design and distribution obligations related to its margin trading product.
ASIC Deputy Chair Sarah Court said,
"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."
In a press release dated September 21, ASIC alleged that Bit Trade failed to establish a target market determination for the product before making it available to Australian customers, as mandated by law.
Despite receiving notification from ASIC about this compliance issue in June 2022, Bit Trade continued to offer the product to Australian customers without meeting the target market determination requirement.
Design and distribution obligations are a legal mandate for companies offering financial products in Australia. These obligations outline specific criteria for firms to design financial products that cater to the predetermined needs of customers and then distribute them through a targeted approach.
"ASIC's action should be a reminder of the importance of complying with the design and distribution obligations so that financial products are distributed to consumers appropriately."
In the context of this legal action, ASIC is seeking specific legal remedies. These include formal declarations from the court, financial penalties, and injunctions to prevent any further alleged breaches of compliance.
Currently, the court is in the process of determining the schedule for the initial case
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