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September 23, 2023

Australian Financial Regulator Sues Kraken Subsidiary for Allegedly Violating Margin Trading Regulations

By Conor Devitt

Australia’s financial regulator has launched a civil lawsuit against a subsidiary of the crypto exchange Kraken for allegedly failing to comply with regulations for its margin trading product.

The Australian Securities and Investments Commission (ASIC) alleges that Bit Trade, Kraken’s arm of operations in the country, failed to make a “target market determination” for its margin product before offering it to consumers as required by law.


The Australian government says a target market determination is a document “which describes the type of customers who a product is appropriate for, based on their likely needs, objectives and financial situation (target market), and establishes the distribution conditions and restrictions around how the product can be distributed to customers.”

ASIC argues that Bit Trade’s margin trading product is a credit facility because the Kraken subsidiary offers customers credit for use in the sale and purchase of certain crypto assets.

The regulator notes the exchange has offered the product since the beginning of 2020. It argues the firm has failed to comply with regulations that came into place in October 2021, and notes that at least 1,160 Australian customers have used the margin trading product and lost a total of $12.95 million since that point.

Says ASIC Deputy Chair Sarah Court,


“These proceedings should send a message to the crypto industry that products will continue to be scrutinized by the ASIC to ensure they comply with regulatory obligations in order to protect consumers.”

Kraken, which is based in San Francisco, acquired Bit Trade in 2020.

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