Author: Tom Mitchelhill, Cointelegraph; Translation: Song Xue, LianGuai
The Australian Securities and Investments Commission (ASIC) has filed a civil lawsuit against Bit Trade, the provider of Australian cryptocurrency exchange Kraken, for failing to comply with the design and distribution obligations of its trading products.
According to ASIC’s statement on September 21, the Australian financial regulatory agency accuses Bit Trade of failing to identify the target market before offering margin trading products to Australian customers.
Design and distribution obligations are legal requirements that companies offering financial products in Australia must comply with. These obligations specify the requirements for companies to design financial products that meet customer needs and then distribute them through targeted plans.
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The regulatory agency stated that since the introduction of design and distribution obligations in October 2021, at least 1,160 Australian customers have used Bit Trade’s margin trading products, resulting in a total loss of approximately $8.35 million (AUD 12.95 million).
ASIC stated that it notified Bit Trade of its failure to comply with the obligations in June 2022, but Bit Trade continued to offer the product.
Bit Trade’s margin trading product is a “margin extension” service that allows customers to obtain credit extensions up to five times the value of the assets used as collateral.
The financial regulatory agency claims that the product is actually a “credit convenience” as it provides customers with “credit for buying and selling certain cryptocurrencies on the Kraken exchange”.
ASIC Deputy Chair Sarah Court stated that “this litigation should serve as a reminder to the cryptocurrency industry that financial products will continue to be subject to scrutiny by regulatory agencies to ensure compliance with consumer protection laws in the country.”
“ASIC’s actions should remind people of the importance of complying with design and distribution obligations so that financial products can be properly provided to consumers.”
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