The Australian Securities and Investments Commission has initiated civil proceedings against Bit Trade Pty Ltd.
The company allegedly failed to comply with design and distribution obligations for its margin trading product, a violation that has led to significant customer losses., the Australian Securities and Investments Commission has begun legal proceedings against Bit Trade Pty Ltd, the firm responsible for delivering the Kraken cryptocurrency exchange services to Australian clients.
The DDO framework, established to safeguard consumers, requires firms to design financial products that cater to the needs of customers and distribute them in a targeted and responsible manner. ASIC’s allegations against Bit Trade revolve around the failure to make a target market determination for its margin trading product before offering it to Australian customers, as required by law.operates as a credit facility, provides customers with credit to buy and sell select crypto assets on Kraken.
The regulator disclosed that, since the start of the DDO in October 2021, at least 1,160 customers had used Bit Trade’s margin trading product, resulting in a cumulative loss of approximately A$12.95 million . ASIC’s civil proceedings against Bit Trade aim to address these alleged lapses in compliance.ASIC Deputy Chair Sarah Court emphasized the importance of regulatory scrutiny in protecting consumers within the cryptocurrency sector.
Bit Trade has offered its margin trading product to Australian customers via Kraken since January 2020. Despite ASIC’s concerns raised in June 2022, the company continues to provide the product without establishing a target market determination, which is essential for responsible distribution under the DDO.Bit Trade’s ongoing conduct. The date for the first case management hearing is yet to be scheduled by the Court.