Photo credit: Reuters

Australia's corporate regulator has imposed an A$8 million ($5.1 million) fine on Bit Trade, the operator of the Kraken cryptocurrency exchange in the country, for unlawfully offering credit facilities to over 1,100 customers.

The Australian Securities and Investments Commission (ASIC) announced the penalty on Thursday, citing failures in compliance with regulatory requirements.

According to ASIC, Bit Trade did not adequately assess the suitability of customers for a margin trading product, which led to significant financial losses. The product in question allowed users to access margin extensions — essentially loans — repayable in digital assets like Bitcoin or traditional currencies such as the U.S. dollar. This oversight resulted in customer losses exceeding $5 million.

In August, the Federal Court of Australia determined that the margin trading product qualified as a credit facility under Australian law. Such products require a target market determination to ensure they are appropriately marketed and sold to customers.

“Target market determinations are fundamental in ensuring that investors are not inappropriately marketed products that could harm them,” said ASIC Chair Joe Longo in a statement.

The case underscores the importance of regulatory compliance in the rapidly evolving cryptocurrency market. It also highlights the risks associated with margin trading products and the responsibility of operators to ensure they are suitable for their intended audience.

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