A Federal Court in Australia has fined the operator of Kraken, Bit Trade, for violating the country’s regulations. As revealed, the Australian firm will pay $5.1 million and cover court costs within 60 days.
According to the judgment, the Federal Court found Bit Trade guilty of failing to comply with some of the country’s regulations guiding the digital assets sector. Similarly, the court accused the operator of Kraken of failing to register as a credit facility provider.
Meanwhile, the fine comes short of the $12.8 million the Australian Securities and Investment Commission (ASIC) aims to inflict on the company. Conversely, Bit Trade pleaded that the fine be reduced to $2.5 million. However, the judge rejected the plea, labeling it “insufficient.”
In its defense, Bit Trade explained how it cooperated with prosecutors throughout the trial. While expressing its disappointment with the outcome, a representative of the firm added that Bit Trade appreciated the court for acknowledging its support.
Nonetheless, the company went on to call for an urgent implementation of a crypto regulatory framework. Bit Trade established that without proper regulation, investors and businesses will remain in the dark about how to interact appropriately with the digital assets sector.
Likewise, the firm disclosed that the recent ruling will affect the growth of the cryptocurrency market in Australia.
How Bit Trade Failed to Meet Regulatory Requirements
Bit Trade has endured heavy criticism from the Judge and the ASIC after an investigation revealed that the firm offered a product that allows users to read crypto or fiat with leverage. The offering, according to the ASIC, is a violation of its regulations as the company failed to secure the needed target market determination (TMD).
In a separate statement, the Chairman of the ASIC, Joe Longo, explained the implication of Kraken operator’s violation. The chair illuminated how TMD is essential to protecting investors against illicit projects.
According to the executive, more than 1,100 Australians spent more than $7 million in fees on the product while losing more than $5 million. Longo recalled how one investor lost about $4 million to the offering.
More so, the chair describes the court ruling as a significant outcome. He noted that the fine is the first the ASIC will impose on a company for failing to have a TMD. Lastly, Longo added that the verdict will serve as a reminder to virtual assets companies to always fulfill their regulatory obligations.
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