The Australian Securities and Investments Commission (ASIC) reported this ruling. Bit Trade Pty, a subsidiary of US-based Payward Incorporated, faced civil proceedings initiated by ASIC in September 2023. The regulator alleged that Bit Trade did not perform a target market determination for the margin trading product before offering it to customers, despite prior concerns being raised.
ASIC argued that the product constituted a credit facility due to the nature of the obligation to repay, classifying it as a financial product that should have been distributed appropriately under legal requirements.
A Kraken spokesperson acknowledged the court's decision and stated that while they are disappointed, they are prepared to comply with the ruling. In addition, the US Securities and Exchange Commission filed a lawsuit against Kraken in November 2023 for allegedly operating as a securities exchange without proper registration.
ASIC and Bit Trade are now expected to finalize declarations and injunctions within seven days, with ASIC planning to seek financial penalties at a later stage.
In April 2024 Kraken acquired TradeStation Crypto to enhance its regulatory licensing in the US. This acquisition, involving TradeStation's digital asset division, aimed to strengthen Kraken's regulatory framework and support its growth and product expansion in the US.
TradeStation Crypto held various money transmitter and other regulatory licenses across most US states in recent years. However, it faced issues with the US Securities and Exchange Commission regarding a lending service, leading to a USD 3 million settlement. Following this, TradeStation announced its withdrawal from the crypto market.
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