Crypto-Exchange

Australian regulator sues crypto exchange for alleged breach of anti-money laundering laws

On Thursday, Australia's corporate regulator said that it has launched civil proceedings against Bit Trade Pty Ltd, the supplier of the Kraken crypto exchange to Australian consumers, for failing to meet design and distribution criteria for its margin trading product.

Firms are required to create and distribute financial products that satisfy the needs of customers and to distribute them in a targeted way under the design and distribution obligations (DDO).

The Australian Securities and Investments Commission (ASIC) said that Bit Trade failed to determine the product's target market before providing it to clients and that it continues to provide it despite being alerted of the ASIC's concerns in June last year.

According to ASIC, Bit Trade's margin trading product is a credit facility since it gives consumers credit to purchase and sell specific crypto assets on the Kraken exchange.

Customers can obtain up to five times the value of the assets they provide as security, according to the regulator. Since DDO's inception in October 2021, at least 1,160 consumers have utilised the margin trading product, resulting in a total loss of around A$12.95 million ($8.35 million).

ASIC is seeking declarations, monetary penalties, and injunctions to prevent Bit Trade's continued behaviour.

"These proceedings should send a message to the crypto industry that products will continue to be scrutinised by ASIC to ensure they comply with regulatory obligations to protect consumers," said ASIC Deputy Chair Sarah Court.