Australia fines crypto exchange operator Kraken by $5.1 million Reuters

(Reuters) – Australia’s corporate watchdog said on Thursday the country’s federal court had ordered local crypto exchange operator Kraken to pay a fine of A$8 million ($5.1 million) for illegally issuing loans to more than 1,100 customers.

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

ASIC said Bit Trade failed to identify the right customers for a margin trading product, resulting in losses of more than $5 million.

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

Bit Trade’s product allowed margin extensions, a form of credit or loan, to be made and repaid in digital assets like Bitcoin or in national currencies like US dollars.

The company was disappointed with the outcome of the case, a Kraken spokesman said in an emailed statement.

“We believe these decisions significantly hinder the growth of the Australian economy.” We look forward to engaging constructively with policymakers and regulators as these rules evolve.”

In August, a federal court found that the product was a credit facility because it offered margin expansion in national currencies, which requires a mandatory public document called a target market determination – which determines which class of consumers would be most suitable for the product.

The fine is the first instance against the entity for failing to identify a target market, the regulator said.

($1 = 1.5593 Australian dollars)