Kraken Crypto Exchange Operator Hit With $5m Fine in Australia

An Australian court has ordered Bit Trade, the local operator of a Kraken crypto exchange, to pay a large fine for unlawfully issuing a credit facility to more than 1,100 customers.

The country’s corporate watchdog said on Thursday the Federal Court had ordered the Kraken exchange operator to pay an A$8 million ($5.1 million) fine.

The Australian Securities and Investments Commission (ASIC) initiated civil proceedings last year against Bit Trade, which operates the Kraken exchange in Australia, for failing to comply with rules for its margin trading product.

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ASIC said that Bit Trade failed to determine the right customers for the margin trading product, resulting in losses of more than $5 million.

“Bit Trade issued its margin extension product to over 1,100 Australians who were charged fees and interest of more than US$7 million without considering if the product was appropriate for them,” ASIC said in a statement.

Bit Trade’s product allowed for margin extensions, a form of credit or loan, to be made and repaid in either digital assets like bitcoin or national currencies such as US dollars.

The company was disappointed with the outcome of the case, a Kraken spokesperson said in an emailed statement.

“We believe these rulings significantly hamper growth in the Australian economy. We look forward to engaging constructively with policymakers and regulators as these rules are developed.”

In August, the federal court found that the product was a credit facility, as it offered margin extensions in national currencies, which requires a mandatory public document – called target market determinations – setting out which class of consumer would be best suited for the product.

The penalty marks the first instance against an entity for failing to have a target market determination, the regulator said.