Australia’s Federal Court has imposed a fine of 8 million Australian dollars (approximately $5.1 million) on Bit Trade, the local operator of the cryptocurrency exchange Kraken, following a ruling in favor of the Australian Securities and Investments Commission (ASIC). The court found that Bit Trade had not adhered to its design and distribution obligations and was operating as a credit facility without the necessary licensing.
In a ruling on December 12, Justice John Nicholas mandated that Bit Trade pay the fine within a 60-day period, along with covering associated court costs. Although the penalty was less than the 20 million AU dollars sought by ASIC, Justice Nicholas described that figure as excessive. Conversely, the judge found Bit Trade’s request to limit the fine to 4 million AU dollars insufficient, thus determining the final amount.
The case highlights significant regulatory concerns in the cryptocurrency sector, particularly regarding the complexities and gaps in existing legislation. A representative from Kraken expressed disappointment with the court’s decision, emphasizing the need for tailored legislation that could better clarify obligations for crypto businesses and protect investors. The representative argued that the ruling might hinder the potential growth of the Australian economy.
ASIC had filed the suit against Bit Trade in September 2023, contending that the company offered a margin extension product enabling users to engage in leveraged trading of cryptocurrencies and fiat currencies without the legally required market determination. According to ASIC, this lack of compliance had financial repercussions for over 1,100 Australian users, who faced significant fees and losses, including one investor who reportedly lost nearly $4 million.
Justice Nicholas commented on the seriousness of Bit Trade’s violations, noting that the company’s actions seemed focused on revenue generation without regard for local corporate laws. The ruling serves as a reminder for crypto firms to assess their regulatory obligations carefully, particularly concerning product offerings to retail investors.
