Reserve

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Million

Green Light

<p>The post <a rel="nofollow" href="https://coinpedia.org/news/asic-targets-krakens-australian-provider-bit-trade-over-failings-in-margin-trading-product/">ASIC Targets Kraken’s Australian Provider Bit Trade Over Failings in Margin Trading Product</a> appeared first on <a rel="nofollow" href="https://coinpedia.org">Coinpedia Fintech News</a></p> 
<p>The Australian Securities and Investments Commission (ASIC) has<a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-256mr-asic-sues-crypto-exchange-alleging-design-and-distribution-failures/?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=23-256mr"> initiated civil penalty</a> proceedings against Bit Trade Pty Ltd, responsible for providing the <a href="https://coinpedia.org/exchange/kraken-review/">Kraken crypto exchange</a> services in Australia. The regulatory body accuses Bit Trade of not adhering to the design and distribution obligations for its margin trading product offered to Australian users. As a result, Bit Trade faces potential declarations, pecuniary penalties, and injunctions.</p> 
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   <p lang="en" dir="ltr">We are suing Bit Trade, provider of the Kraken crypto exchange in Australia, for allegedly failing to comply with the design and distribution obligations (DDO) for its margin trading product. Since October 2021, customers have lost about $12.95 million <a href="https://t.co/MCRYqah0dP">https://t.co/MCRYqah0dP</a> <a href="https://t.co/zURQ2xDw7M">pic.twitter.com/zURQ2xDw7M</a></p>— ASIC Media (@asicmedia) <a href="https://twitter.com/asicmedia/status/1704621481093709893?ref_src=twsrc%5Etfw">September 20, 2023</a>
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<h2 class="wp-block-heading" id="strong-a-loss-of-nearly-13-million-for-australian-customers-strong"><strong>A Loss of Nearly $13 Million for Australian Customers</strong></h2> 
<p>According to ASIC, since introducing the design and distribution obligations on October 5, 2021, at least 1,160 Australian customers have used the product. These users have incurred a total loss of approximately $12.95 million AUD.</p> 
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 <p><em>“These proceedings should send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they comply with regulatory obligations to protect consumers.”&nbsp; Sarah Court, ASIC Deputy Chair</em></p> 
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<p>Also Read : <a href="https://coinpedia.org/news/us-lawmakers-bill-against-federal-reserve-issuing-cbdc-gets-green-light/">US Lawmaker’s Bill Against Federal Reserve Issuing CBDC Gets Green Light</a></p> 
<h2 class="wp-block-heading" id="strong-the-margin-extension-controversy-strong"><strong>The “Margin Extension” Controversy</strong></h2> 
<p>Bit Trade’s margin trading product allows users to receive an extension of credit up to five times the value of the assets they use as collateral, described as a “margin extension” by the firm. ASIC argues that this margin trading product should be classified as a “credit facility,” making it subject to additional regulatory scrutiny.</p> 
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 <p><em>“ASIC’s action should be a reminder of the importance of complying with the design and distribution obligations so that financial products are distributed to consumers appropriately.”</em></p> 
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<h2 class="wp-block-heading" id="h-bit-trade-s-response"><strong>Bit Trade’s Response</strong></h2> 
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 <p>Jonathon Miller, the Managing Director of Kraken’s Australian operations, expressed both surprise and disappointment at the move by ASIC. He said, “We have been attempting to constructively engage with ASIC on this matter for some time to ensure our product offering remains compliant.”</p> 
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<p>Bit Trade has been on ASIC’s radar since June 2022, when the firm was first notified about its failure to comply with the design and distribution obligations. As the case progresses, both parties will likely make more public statements clarifying their positions.</p> 
<p>ASIC seeks various legal remedies, including declarations, pecuniary penalties, and injunctions prohibiting the alleged contravening conduct. No date has been set for the first case management hearing.</p>

ASIC Targets Kraken’s Australian Provider Bit Trade Over Failings in Margin Trading Product

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