The Australian division of crypto exchange Kraken is facing a significant penalty of AU$8 million (US$5.1 million) from the country’s corporate regulator.
The Australian Securities and Investments Commission (ASIC) has imposed the fine on Kraken for unlawfully providing a credit facility to more than 1000 Australians. Kraken, which was operating as Bit Trade in Australia, had been offering a ‘margin extension’ product to its customers since October 2021.
However, the regulator has pointed out that the exchange did not have a target market determination (TMD) in place for the product. ASIC Chairman Joe Longo explained the importance of TMDs in ensuring that investors are not exposed to products that may be harmful to them.
It was discovered that Kraken had charged customers over US$7 million for the margin extension product, without conducting a proper assessment of its appropriateness. As a result, several customers suffered significant trading losses, with one individual losing almost US$4 million.
