Australian Securities and Investments Commission v Bit Trade Pty Ltd (No 2) [2024] FCA 1422

Federal Court of Australia

Australian Securities and Investments Commission v Bit Trade Pty Ltd (No 2) [2024] FCA 1422 File number: NSD 1039 of 2023

Judgment of: NICHOLAS J

Date of judgment: 12 December 2024

Catchwords: CORPORATIONS – determination of pecuniary penalty for defendant's contravention of s 994B(2) of the Corporations Act 2001 (Cth) requiring defendant to make a target market determination – where defendant made available margin extension to customers to purchase cryptoassets on Kraken exchange ("the Product") – relevance of legal advice obtained by defendant where proceeding brought by plaintiff defended on different basis – relevance of disclosures made by defendant to customers concerning risk of loss – where substantial fees and interest generated by making the Product available – where vast majority of customers to whom the Product was made available were retail clients – where the Product carried very high degree of financial risk that could result in customers losing more than they had invested – where contraventions occurred over a period of 35 months Held: pecuniary penalty of $8.0 million imposed

Legislation: Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 2001 (Cth) ss 761G, 761GA, 765(1)(h), 994A, 994B, 994C(2), 994C(4), 994D, 994E(1), 994F(1), 994G, 1317G, Pt 7.8A Australian Securities and Investments Commission Regulations 2001 (Cth) reg 2B(3)(a) Corporations Regulations 2001 (Cth) reg 7.8A.20

Cases cited: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 Australian Competition and Consumer Commission v Grays Ecommerce Group Limited [2024] FCA 771 Australian Securities and Investments Commission v American Express Australia Limited [2024] FCA 784 Australian Securities and Investments Commission v Bit Trade Pty Ltd [2024] FCA 953 Australian Securities and Investments Commission v Citrofresh International Ltd (No 3) (2010) 268 ALR 303 Australian Securities and Investments Commission v Commonwealth Bank of Australia [2020] FCA 790 Australian Securities and Investments Commission v Web3 Ventures Pty Ltd (Penalty) [2024] FCA 578 Australian Securities and Investments Commission v Westpac Banking Corporation (No 3) (2018) 131 ACSR 585 Cameron v R (2002) 209 CLR 339 Trade Practices Commission v CSR Limited (1991) ATPR ¶ 41-076