Australian Regulators Demand Bit Trade Crypto Companies

Crypto operator Kraken, Bit Trade, has been sued. (Photo; Doc. NewsBTC)

JAKARTA - The Australian Securities and Investment Commission (ASIC) has started the civil punishment process against Bit Trade, the operator of the cryptocurrency exchange Kraken in Australia. This action is a response to alleged violations related to the design and distribution obligation (DDO) of one of its trading products.

According to ASIC, Bit Trade is considered a failure in determining market targeting before offering margin trading products to Australian customers. Since the implementation of DDO in October 2021, more than 1,160 Australian customers have allegedly suffered losses of around $12.95 million (Rp198 billion) when using Bit Trade margin trading products through the Kraken exchange.

DDO's legal requirements apply to Australia's business providing financial products. This requirement requires businesses to create financial products that meet clients' demands and market them according to the established strategy.

Bit Trade introduced margin trading products to Australian customers via Kraken in January 2020. Regulators alleged that at least since the DDO was implemented on October 5, 2021, some 1,160 Australian customers have used this margin trading product, resulting in a loss of Rp198 billion.

The ASIC had previously expressed concern about Bit Trade in June 2022 regarding non-compliance with the DDO. However, Bit Trade continues to offer this product to Australian customers without specifying the target market accordingly.

In response to regulatory action, Bit Trade's margin trading product, which was originally considered a "margin extension," is now classified as a "credit facility" by financial authorities. This product allows customers to access credit up to five times their collateral value to trade certain crypto assets on the Kraken exchange.

The ASIC is currently seeking declarations, fines, and orders to ban Bit Trade from potential further abuses linked to their margin trading products. The case is in the spotlight in the crypto world, highlighting the importance of compliance with consumer regulation and protection in the growing industry.