News 
December 16, 2024 
3 min. 
An Australian court has fined Kraken, a digital asset exchange, $5.1 million AUD for unlawfully providing credit to over 1,100 Australian customers. The fine follows legal action by the Australian Securities and Investments Commission (ASIC).
According to ASIC’s statement on Dec. 12, the penalty relates to Kraken’s “margin extension” product. This offering, available since October 2021, allowed users to borrow and repay funds in digital assets like bitcoin or traditional currencies like the U.S. dollar.
However, Kraken failed to provide a target market determination (TMD) for the product, which is a legal requirement.
How Kraken Operator Violated DDO Rules in Australia
In August, an Australian Federal Court ruled that Bit Trade, Kraken’s operator in the country, violated design and distribution obligations (DDO) every time it offered the product without a TMD. ASIC Chair Joe Longo stated that TMDs are crucial for protecting investors from unsuitable financial products. He noted that Kraken charged fees and interest of over $7 million USD to Australian users without assessing whether the product was appropriate.
Longo also revealed that more than $5 million USD in losses were incurred by affected users, with one investor losing nearly $4 million. This case marks ASIC’s first penalty against a digital asset exchange for failing to meet TMD requirements. Longo emphasized that the fine should serve as a warning to other platforms still operating without full regulatory compliance.
Justice Nicholas of the Federal Court described Kraken’s non-compliance as “serious and motivated by a desire to maximize revenue.” He highlighted the company’s inadequate compliance systems, especially since it continued offering the product after being warned. Along with the fine, the court also ordered Kraken to cover ASIC’s legal costs.
