Kraken Fined AU$8 Million For Illegal Margin Products In Australia
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Crypto exchange Kraken has been ordered to pay AU$ 8 million (about US$5.1 million) by the Australian Securities and Investments Commission (ASIC). The fine was given to Kraken after it was found guilty of offering margin products illegally to more than 1,100 customers in Australia.
The margin products allowed Kraken customers to borrow money to buy and sell cryptocurrencies, which Kraken referred to as “margin extension.” This credit could be repaid with either digital assets or fiat. Customers could receive up to five times the value of their collateral asset as credit.
ASIC’s Chairman, Joe Longo, said target market determinations are very important to protect investors from being sold products that could hurt them. He said Kraken’s actions caused significant trading losses, with one person losing almost US$4 million. Overall, trading losses for customers exceeded US$5 million, according to ASIC.
ASIC Enforces Stronger Rules For Crypto Firms
Kraken’s parent company, Bit Trade, was found guilty of selling its products the wrong way in Australia. The company broke important rules called DDO rules. These rules say that companies must create and sell their products carefully to the right people. Since 2021, ASIC has been checking that companies follow these rules and has punished those, like Kraken, who do not.
ASIC believes many digital companies, like Kraken, must follow these rules. Joe Longo from ASIC said companies should be careful when creating and selling their products to keep Australians safe.
The fine given to Kraken is part of ASIC’s plan to keep the crypto industry safe for everyone. Other companies, like eToro, are also in trouble for breaking the same rules. ASIC has already stopped some companies from selling their products because they didn’t follow the DDO rules.
The New Law Requires Crypto Firms To Hold Relevant License
Along with the fine, the Australian government has suggested new laws that would require crypto companies to get a license. This strengthens the laws surrounding digital companies and gives better protection to people using their services.
Experts think that these changes could affect how crypto companies, like Kraken and eToro, work in Australia. The rules for digital companies are getting stricter, which might change the way these companies do business in the country.
The Australian government’s recent paper shows that it wants to strengthen the rules for crypto platforms. This could mean that all crypto companies will need a license to operate, ensuring only safe and trustworthy companies can do business in Australia.
