Kraken Fined $5.1 Million in Australia for Violating Crypto Margin Trading Rules

The penalty marks the first enforcement under Australia's design and distribution obligations, highlighting regulatory scrutiny of crypto exchanges.

The Australian Securities and Investments Commission (ASIC) fined Bit Trade, Kraken's local operator, $5.1 million for offering illegal margin trading products to over 1,100 retail investors.
The Federal Court of Australia ruled that Kraken's margin trading product qualified as a credit facility, requiring a target market determination (TMD) under regulatory rules introduced in 2021.
ASIC found that Bit Trade failed to assess customer suitability for high-risk products, resulting in collective trading losses exceeding $5 million, including one investor losing nearly $4 million.
Justice Nicholas criticized Bit Trade's compliance systems as 'seriously deficient,' noting the company ignored regulatory obligations until ASIC intervened.
This enforcement signals increased regulatory scrutiny in Australia's crypto sector, as ASIC consults on updated rules for digital asset firms, with requirements for licensing under corporate law.