ASIC squares off against Kraken operator Bit Trade in landmark crypto trial
The legal case could have significant implications for the future of both leveraged financial products and digital currency trading in Australia.
The corporate regulator ASIC is battling the operator of the Kraken crypto exchange on two fronts in a legal case that could have significant implications for the future of both leveraged financial products and digital currency trading in Australia.
ASIC has accused Bit Trade, which owns Kraken in Australia, of failing to make a "target market determination" setting out the appropriate customers for its margin trading product, which allows customers to trade certain crypto assets on up to five times leverage. The regulator alleges Bit Trade's "margin extension" is in fact a credit facility and that more than 1000 Australian customers have lost nearly $13 million using it.
In a first case-management hearing in the matter on Thursday, ASIC's barrister James Giles appeared before Federal Court of Australia Judge John Nicholas to unpack the main point of contention between the regulator and Bit Trade's legal team. Gilbert + Tobin is acting for Bit Trade in the case, instructing barristers James Arnott and Amy Campbell.
Giles said that "one of the oddities" in the case is that "a credit facility is not a financial product for the purpose of the Corporations Act generally, but it is for the purpose of the ASIC Act."
