Australian Federal Court Rules in Favor of ASIC in Case Against Kraken’s Margin Trading Practices

An Australian Federal Court has issued its ruling on a lawsuit filed by the Australian Securities and Investments Commission (ASIC) against Bit Trade Pty Ltd, the operator of cryptocurrency exchange Kraken, voting in favor of the former. It was regarding the availability of exchange’s margin extension product to Australian retail investors. 

The product referred to in the lawsuit allowed Australian retail investors to borrow funds in fiat or cryptocurrency to trade on margin. The ASIC noted that Kraken’s offering of margin in fiat currency violated the Design and Distribution Obligations (DDO) under the Corporations Act. 

As per the court ruling, Kraken extended the margin in fiat currency. It was subject to the DDO, however, the extension of the margin in cryptocurrency was not.

In a blog post, Kraken revealed that the judgment was a win for people advocating new laws to govern crypto. “Although we are disappointed that the ruling found an aspect of Kraken’s margin product violated part of the Corporations Act, the judgment highlighted, and clearly affirmed, that existing Australian law is not effective at regulating crypto,” the exchange noted. 

Furthermore, the blog added that Australian crypto investors and businesses continue to operate in a confusing and uncertain regulatory environment. 

Following the release of the judgment, Kraken immediately moved to ensure its operations complied with Australian law. The company noted that margin trading in fiat is now restricted to wholesale clients under the Corporations Act, although crypto-based margin extensions remain unaffected.

Kraken has committed to expanding its product offerings within the bounds of regulatory compliance. It is now working on new pathways for fiat margin trading.

In a significant development last month, the Federal Court for the Northern District of California ruled that tokens being traded on Kraken are not considered as securities. 

Marco Santori, the Chief Legal Officer of Kraken, made the announcement, calling it a “significant win for Kraken, for the principle of clarity and for crypto users everywhere. It also confirms Kraken’s long-standing position that it does not list securities.”

Australia continues to face challenges in developing a comprehensive regulatory policy for cryptocurrency, while other countries have implemented clear, crypto-specific frameworks. This delay in establishing legislation is presenting obstacles to the growth of the crypto sector in the country.

Read More

• Federal Court Rules in Favor of Kraken: Tokens on Platform Not Securities
• Australian Court Rules Against Kraken’s Local Operator Over Regulatory Breach
• CertiK and Kraken’s Crypto Caper: A Heist, a White Hat Hack, or a Marketing Masterclass?
  

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.