The Australian court has ordered bit tradingThe local operator of the Kraken cryptocurrency exchange has paid a hefty fine for illegally extending credit facilities to more than 1,100 customers.
The country’s corporate regulator said on Thursday that a federal court had Ordered Kraken exchange operator to pay A$8 million (US$5.1 million) fine.
The Australian Securities and Investments Commission (ASIC) last year launched civil proceedings against Bit Trade, which operates the Kraken exchange in Australia, for failing to comply with rules for its margin trading products.
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ASIC said Bit Trade failed to identify suitable customers for margin trading products, resulting in losses of more than $5 million.
“Bit Trade issued a margin extension product to more than 1,100 Australians who were charged more than $7 million in fees and interest without considering whether the product was suitable for them,” ASIC said in a statement.
Bit Trade’s products allow for margin extensions, a form of credit or loan that can be made and repaid in digital assets such as Bitcoin or in national currencies such as the U.S. dollar.
A Kraken spokesperson said in an emailed statement that the company was disappointed with the outcome of the case.
“We believe these rulings are a serious impediment to the growth of 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 instrument because it offered margin extensions in national currency, which required a mandatory public document (known as a target market decision) setting out which categories of consumers were best suited for the product.
The regulator said the penalty was the first case against an entity that failed to identify its target market.
- Reuters Additional editing by Jim Pollard
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