Australia: Announced public lawsuit against Bit Trade by ASIC for alleged design and distribution failures

On 21 September 2023, the Australian Securities and Investments Commission (ASIC) announced civil penalty proceedings against Bit Trade. Bit Trade is the Australian provider of the Kraken cryptocurrency exchange. ASIC alleges that Bit Trade failed to comply with design and distribution obligations for its margin trading product offered on the Kraken exchange. Specifically, ASIC's case focuses on Bit Trade's failure to establish a target market determination - a document describing a product's target market and its distribution conditions - for the product before offering it to Australian customers, as required by law. The product in question is a so-called margin trading product which offers customers credit for crypto asset trading on Kraken. According to ASIC, the product has been offered to customers likely to be outside of its target market and, despite ASIC notifying Bit Trade of these concerns, the company continues to offer the product without a target market determination. ASIC seeks declarations, pecuniary penalties, and injunctions to prohibit further non-compliance. The first case management hearing date is yet to be scheduled by the Court. Bit Trade has offered the margin trading product since January 2020, with at least 1'160 Australian customers incurring total losses of approximately AUD 12.95 million.