Australia orders $5.1 million fine on cryptocurrency exchange operator Kraken by Reuters

(Reuters) – Australia’s corporate watchdog said on Thursday that the country’s Federal Court has ordered local cryptocurrency exchange operator Kraken to pay an A$8 million ($5.1 million) fine for illegally issuing credit facilities to more than 1,100 customers.

The Australian Securities and Investments Commission (ASIC) began civil proceedings last year against Bit Trade, which operates the Kraken exchange in Australia, for non-compliance with rules for its margin trading product.

ASIC said Bit Trade failed to identify suitable clients for its margin trading product, resulting in losses of more than $5 million.

“Bit Trade issued a margin rollover product to more than 1,100 Australians who were charged more than $7 million in fees and interest without considering whether the product was right for them,” ASIC said in a statement.

The Bit Trade product allowed margin expansion, a form of credit or loans, to be repaid in either digital assets such as Bitcoin or national currencies such as the US dollar.

A Kraken spokesperson said in an emailed statement that the company was disappointed with the outcome of the case.

“We believe these provisions significantly impede the growth of the Australian economy. We look forward to engaging constructively with policymakers and regulators as these rules are developed.”

In August, the Federal Court found that the product amounted to a credit facility because it offered margin extensions in national currencies, which required a mandatory public document called target market determinations – identifying the category of consumers most suitable for the product.

The regulatory body said the penalty represents the first case against an entity for failing to identify its target market.

($1 = 1.5593 Australian dollars)