Canberra, Sunday, September 01, 2024 – The Federal Court of Australia ruled in favor of the Australian Securities and Investments Commission (ASIC) on Friday, finding that Kraken’s local operator, Bit Trade Pty Ltd, violated the Corporations Act.
The case centered around Kraken’s margin extension product, which was offered without a required “target market determination” under Section 994B of the Act.
Justice Nicholas determined that Bit Trade’s issuance of the margin extension product to retail clients without prior target market determination constituted a breach of the Corporations Act.
The ruling highlighted that a margin extension in national currency created a deferred debt, qualifying the product as a credit facility under Australian law.
ASIC Deputy Chair Sarah Court emphasized the significance of this outcome, stating that it underscores ASIC’s commitment to ensuring crypto products comply with regulatory obligations to protect consumers. The regulator will seek financial penalties against Bit Trade and expects to agree on declarations and injunctions within seven days.
Kraken however expressed disappointment with the ruling but affirmed the company’s commitment to comply with the court’s decision.
It also noted the complexities of applying existing regulations to innovative technologies, citing the judgment as evidence of the unclear legal landscape surrounding crypto offerings in Australia.
Analysts say that the case marks a pivotal moment in the ongoing regulation of cryptocurrency products in Australia, with ASIC taking a firm stance on ensuring compliance.
