Overview

• 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.