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**ASIC Commences Civil Proceedings against Bit Trade for Failure to Comply with Design and Distribution Obligations**

The Australian Securities and Investments Commission (ASIC) has taken legal action against Bit Trade, the provider of the Kraken crypto exchange in Australia, for allegedly violating design and distribution obligations related to one of its trading products. As per ASIC’s statement released on September 21, the financial regulator accused Bit Trade of not making a target market determination prior to offering its margin trading product to Australian customers.

**Design and Distribution Obligations: A legal Requirement in Australia**

In Australia, firms that offer financial products are required by law to fulfill design and distribution obligations. These obligations entail specific criteria that firms must adhere to when designing financial products, ensuring that they meet customers’ predetermined needs. Furthermore, firms must distribute these products through targeted plans.

**How AI legalese decoder Helps in This Situation**

The AI legalese decoder can play a crucial role in assisting Bit Trade in this legal situation. By leveraging AI technology, the decoder can provide Bit Trade with valuable insights and guidance on complying with the complex design and distribution obligations. It can analyze the specific requirements, interpret the legal jargon, and provide step-by-step instructions for designing and distributing financial products that meet regulatory standards. This would help Bit Trade avoid potential pitfalls and legal ramifications associated with non-compliance.

**Alleged Losses and Failure to Comply**

According to ASIC, since the implementation of design and distribution obligations in October 2021, approximately 1160 Australian customers have utilized Bit Trade’s margin trading product and collectively suffered losses of around $8.35 million (AUD 12.95 million). Despite being notified of its non-compliance in June 2022, Bit Trade allegedly continued offering the product without making the necessary determinations as required by the obligations.

**Understanding Bit Trade’s Margin Trading Product**

Bit Trade’s margin trading product, termed a “margin extension” service, allows customers to receive credit extensions up to five times the value of their collateral assets. However, ASIC argues that this product should be classified as a “credit facility” since it provides customers with credit for trading specific crypto assets on the Kraken exchange.

**Regulator’s Message to the Crypto Industry**

Sarah Court, ASIC’s deputy chair, emphasized that these proceedings serve as a reminder to the crypto industry about the continual scrutiny of financial products by regulators to ensure compliance with consumer protection laws in the country. The message conveyed by ASIC is to emphasize the importance of abiding by design and distribution obligations, guaranteeing appropriate distribution of financial products to consumers.

**Seeking Statement from Kraken**

Cointelegraph reached out to Kraken for a statement regarding this matter. However, at the time of publication, Kraken had not responded.

*Note: The AI legalese decoder is a hypothetical tool designed to assist companies like Bit Trade in understanding complex legal obligations. It is not a real product.

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