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Australia Regulator Sues FIIG Securities for Cybersecurity Failures

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The Australian Securities and Investments Commission (ASIC) announced on Thursday that it is suing FIIG Securities, a fixed-income broker, accusing the company of failing to implement proper cybersecurity measures over a four-year period. These alleged failures allowed a hacker to infiltrate FIIG’s IT network, resulting in the theft of approximately 385 gigabytes of confidential data.

The breach, which occurred between May 19 and June 8, 2023, affected 18,000 clients, who were notified that their personal information may have been compromised. Some of the stolen client data was later found on the dark web.

ASIC’s lawsuit claims that from March 2019 to June 2023, FIIG failed to take necessary steps to ensure the security of its digital infrastructure. The regulator stated that the company lacked adequate cyber risk management systems, which directly contributed to the attack.

“Advancing digital safety and resilience is a strategic priority for ASIC, and we have been actively engaging with companies to support the continuous improvement of cyber and operational resilience practices,” said ASIC Chair Joe Longo.

During the period when the cybersecurity issues occurred, JPMorgan held assets for FIIG and its clients, ranging in value from A$2.89 billion ($1.83 billion) to A$3.7 billion. However, JPMorgan declined to comment on the matter when contacted by Reuters, and FIIG did not respond to requests for comment.

According to ASIC, the deficiencies alleged include FIIG’s failure to adequately update and patch its software, as well as its insufficient resources to protect against and prevent cyberattacks.

Australia Imposes $5.1 Million Fine on Kraken’s Local Operator

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Australia’s Federal Court has ordered Bit Trade, the local operator of the Kraken cryptocurrency exchange, to pay a fine of AUD 8 million (approximately USD 5.1 million) for unlawfully offering a credit facility to over 1,100 customers. The ruling follows legal action initiated by the Australian Securities and Investments Commission (ASIC) in 2022, which accused Bit Trade of non-compliance with regulatory requirements tied to its margin trading product.

ASIC’s investigation found that Bit Trade failed to ensure its margin extension product was suitable for its customers, resulting in collective losses of more than USD 5 million. “Bit Trade issued its margin extension product to over 1,100 Australians, charging fees and interest exceeding USD 7 million, without considering whether the product was appropriate for them,” ASIC stated.

The margin extension product offered by Kraken’s operator allowed users to access credit or loans in either digital assets, such as Bitcoin, or traditional currencies like the U.S. dollar. However, this financial product was classified as a “credit facility” by the court in August, as it provided margin extensions in national currencies. Under Australian law, such products must include a publicly available target market determination (TMD), a document specifying the class of consumers best suited for the product.

This case marks the first enforcement action related to the absence of a TMD in Australia. ASIC emphasized the importance of compliance in ensuring consumer protection within the rapidly evolving cryptocurrency sector.

Bit Trade expressed disappointment with the decision. A Kraken spokesperson stated, “We believe these rulings significantly hamper growth in the Australian economy. We look forward to engaging constructively with policymakers and regulators as these rules are developed.”

The penalty is a stark reminder of the growing scrutiny facing cryptocurrency exchanges globally as governments and regulatory bodies aim to safeguard consumers while addressing potential risks in the crypto market.