The Australian Securities and Investments Commission (ASIC) has commenced legal action against cryptocurrency exchange Kraken's Australian provider Bit Trade.
Cryptocurrency Exchange Kraken Is Being Sued In Australia
ASIC alleges that Bit Trade did not conduct proper analysis of the target market and distribution strategy for its margin trading product before making it available to Australian investors. Over 1,160 customers in Australia utilized the product and collectively incurred total losses of $8.35 million.
While ASIC warned Bit Trade of its non-compliance with statutory obligations regarding product design and distribution standards in June, the regulator alleges margin trading was nonetheless marketed and sold without correcting highlighted flaws.
ASIC deputy chair Sarah Court mentioned:
"These proceedings should send a message to the crypto industry that products will continue to be scrutinised by ASIC to ensure they comply with regulatory obligations in order to protect consumers."
When releasing new products, financial services firms in Australia are required by law to select acceptable target demographics and distribution channels based on consumer risk profiles.
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