Australian Authority Sues Bit Trade For Crypto Trading Margin Products

Bit Trade Pty Ltd, provider of the Kraken crypto exchange to Australian customers. (photo: twitter @btradeio)

On Thursday, September 21, Australia's corporate regulatory authority, the Australian Securities and Investments Commission (ASIC), announced that it had started a civil legal process against Bit Trade Pty Ltd, a provider of crypto exchange Kraken to Australian customers. Byt Trade is considered to have failed to comply with design and distribution obligations for its margin trading products.

The obligation to design and distribute (DDO) requires companies to design financial products that meet consumer needs and distribute them in a direction.

The ASIC alleges that Bit Trade failed to establish a target market for its products before offering them to customers, and continues to offer them despite being informed of ASIC concerns in June last year.

"Bit Trade margin trading products are credit facilities for providing credit to customers to buy and sell certain crypto assets on the Kraken exchange," ASIC said.

Regulators note that customers can receive credit extensions of up to five times the value of the assets they use as collateral. At least 1,160 customers have used the margin trading product, with a total loss of around USD 12.95 million ($8.35 million) since DDO began in October 2021.

The ASIC is seeking declarations, financial sanctions, and orders to stop ban Bit Trade's constant action.

"This legal process should be a message to the crypto industry that products will continue to be supervised by the ASIC to ensure they comply with regulatory obligations to protect consumers," said ASIC Deputy Chair Sarah Court.