Australia’s Federal Court has found Kraken’s local operator, Bit Trade Pty Ltd, in contravention due to crypto regulations and the country’s Corporations Act. The court determined that Bit Trade violated Section 994B of the Corporations Act by offering its “margin extension” product to retail clients without first making a “target market determination.” This requirement, designed to protect consumers, has been in place since October 2021.
While the ruling acknowledged the complexities of applying existing regulatory frameworks to innovative technologies, it ultimately sided with ASIC’s interpretation that margin extensions in national currency created a deferred debt, classifying the product as a credit facility.
Kraken, while expressing disappointment with the outcome, has signaled its willingness to comply with the court’s decision. The exchange’s legal spokesperson highlighted the challenges of operating in a regulatory environment where “the law with respect to crypto offerings in Australia is not clear.”
ASIC Deputy Chair Sarah Court emphasized the importance of this outcome, stating it sends a clear message to the crypto industry about compliance with regulatory obligations.
The two parties now have seven days to agree on declarations and injunctions, with ASIC seeking financial penalties against Bit Trade. This ruling could set a precedent for how digital asset products are regulated in Australia.
Also Read: Bitcoin’s $100K Target Delayed but Inevitable, Says Antony Scaramucci