The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against Bit Trade, the Australian company that supplies the Kraken bitcoin exchange, for failing to comply with the design and distribution criteria for one of its trading products.
The American cryptocurrency exchange Kraken’s supplier, Bit Trade, did not specify its target market prior to selling its margin trading product to Australian customers, according to ASIC, which claimed this in a media statement on September 21.
Design and distribution requirements (DDO) are required by Australian law for companies that offer financial products. The requirements lay out standards for companies to create financial products that cater to consumers’ preset needs and then sell them through a certain channel.
According to a statement from ASIC, “Bit Trade’s margin trading product is allegedly a credit facility because it offers customers credit for use in the sale and purchase of specific crypto assets on the Kraken exchange.”
Australian customers have apparently been able to access Bit Trade’s margin trading product through the Kraken exchange since January 2020. The agency also asserted that since the DDOs began in October 2021, at least 1160 Australian clients had used Bit Trade’s margin trading product and had lost a total of over $12.95 million.
According to Sarah Court, deputy chair of ASIC, “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.”
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