Kraken Australia Loses Case to a Regulator in the Court Ruling

Key Points:

• An Australian court ruled in favour of the securities regulator that Kraken’s local operator contravened a rule regarding its margin extension product.
• A Kraken spokesperson said, “Overall, we’re disappointed by today’s ruling, but we’re prepared and willing to comply with the court’s decision.”

Kraken Australia’s operator, Bit Trade Pty Ltd, lost a court case for violating Australia’s Corporations Act by offering products without a target market determination.

Kraken Australia Violates Corporations Act

The Federal Court of Australia recently ruled that Kraken Australia’s operator, Bit Trade Pty Ltd, breached Section 994B of the Corporations Act by offering financial products to retail customers without making a mandatory target market determination.

The Australian Securities and Investments Commission (ASIC) filed a lawsuit against Bit Trade, alleging that Kraken’s spread extension product had been offered without complying with this legal requirement since October 2021. The court determined that Kraken’s spread extension, which involved fiat currency, constituted a credit under Australian law.

Read more: Kraken Custody Services Now Support Clients in the UK and Australia

Kraken Australia Responds to Court Ruling

Kraken Australia expressed disappointment with the ruling but acknowledged the court’s decision and pledged to comply. Kraken’s legal team highlighted the complexity of applying existing regulations to innovative cryptocurrency services and noted that the ruling clarified how to handle their custodial services.

ASIC Deputy Chair Sarah Court said the ruling underscores ASIC’s intent to hold cryptocurrency companies accountable to their regulatory obligations to protect consumers. It stated that financial penalties would be imposed on Bit Trade.