Australia Cracks Down: $5M Penalty for Kraken’s Compliance Lapses

Australia’s Federal Court has ordered Bit Trade, the Australian operator of U.S.-based cryptocurrency exchange Kraken, to pay a fine of 8 million Australian dollars ($5.1 million). The judgment comes after the court sided with the Australian Securities and Investments Commission (ASIC), which accused Bit Trade of failing to comply with regulatory obligations and operating a credit facility without a license.  

Justice John Nicholas, who delivered the Dec. 12 ruling, instructed Bit Trade to pay the fine within 60 days and cover court costs. The penalty was lower than ASIC’s proposed $12.8 million but significantly higher than Bit Trade’s requested $2.5 million.  

Regulatory Violations and Investor Impact

The court found that Bit Trade had violated design and distribution obligations by offering a margin extension product without a legally required target market determination (TMD). The product allowed users to trade with leverage, a service that ASIC Chair Joe Longo said posed risks to retail investors.  

“Target market determinations ensure investors aren’t marketed products that could harm them,” Longo stated. He added that over 1,100 Australians used the margin extension product, paying more than $7 million in fees and interest, with collective losses exceeding $5 million. One investor reportedly lost nearly $4 million.  

The penalty marks ASIC’s first enforcement action against a firm for failing to issue a TMD. Longo emphasized that crypto companies must align with existing laws to ensure consumer protection, calling this case a reminder of the regulatory obligations digital asset firms face.