Kraken, the popular cryptocurrency exchange, is facing a major setback after the country’s federal court slapped its Australian operation with a hefty $5.1 million fine for improperly issuing margin trading products to over 1,100 customers. According to Reuters, the Australian Securities and Investments Commission (ASIC) took legal action against Bit Trade, the company behind Kraken’s Australian arm, for not following the proper regulations when offering its margin trading product.
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Kraken Makes a Margin Trading Mistake
The issue? Bit Trade issued its margin extension product without verifying whether it was suitable for the customers. This oversight resulted in over $5 million in losses for users. ASIC pointed out that the exchange didn’t assess if the product, which allowed margin extensions in both Bitcoin and U.S. dollars, was appropriate for the customers using it. According to the regulator, fees and interest of more than $7 million were charged without proper checks in place.
While Kraken expressed disappointment with the court’s decision, a company spokesperson told Reuters, “We believe these rulings significantly hamper growth in the Australian economy.” The company also made it clear it hopes to work closely with policymakers moving forward.
