Australian regulators have sued Binance Australia Derivatives for failing to protect retail customers.
Binance Australia Derivatives is an Australian arm of the Binance exchange that focuses on crypto derivatives.
The Australian Securities and Investments Commission (ASIC) claims that Binance Australia Derivatives misclassified over 500 retail investors as wholesale clients between July 2022 and April 2023.
More than 500 retail clients of Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, were denied important consumer protections after being misclassified as wholesale clients, ASIC alleges in documents filed in the Federal Court. https://t.co/nw2TxSRR6x pic.twitter.com/Sm9nyBWjjE
— ASIC Media (@asicmedia) December 18, 2024
ASIC Claims Binance Failed to Protect Users
Authorities claim the misclassification robbed retail users of the legal protection provided by local financial laws. ASIC Deputy Chair Sarah Court said Binance’s “inadequate systems” incurred significant losses to many retail clients.
Courts said in a statement, “Crypto derivative products are inherently risky and complex, so retail clients must be classified correctly. Those classifications ensure they receive the required consumer protections”. Australian authorities have closely monitored Binance’s activities and revoked the exchange’s financial services license in April 2023 following a review of the platform’s operations.
There are some misinformation (and confusion) about #Binance Australia.@Binance_AUS requested to cancel the derivatives license yesterday. The platform had exactly 104 users as of yesterday.@Binance_AUS will CONTINUE to operate the spot exchange in AU. 🙏 pic.twitter.com/nEExtG4U90
— CZ 🔶 BNB (@cz_binance) April 6, 2023
ASIC accused Binance of violating several regulatory provisions, including poor systems to ensure compliance with financial laws and a lack of dispute resolution systems. The financial regulator also faulted Binance for failing to deliver its services “honestly and fairly.”
ASIC oversaw the distribution of A$13.1 million ($8.29 million) in compensation to 435 affected investors in November 2023. This reflects the regulator’s commitment to ensuring that standards are upheld.
Australia Tightens Crypto Oversight Amid Industry Reforms
This case is one of several actions by ASIC as it tightens its grip on cryptocurrency regulation. Recently, Australia’s federal court fined Kraken’s local branch A$8 million for similar breaches. Meanwhile, ASIC plans to roll out new financial licensing requirements for crypto exchanges.
Legal proceedings launched by ASIC have seen the Australian operator of the Kraken crypto exchange ordered to pay $8 million for unlawfully issuing a credit facility to more than 1,100 Australian customers https://t.co/YH8A4QRMTH pic.twitter.com/nB16fnTMmg
— ASIC Media (@asicmedia) December 12, 2024
Speaking at a September summit, Commissioner Alan Kirkland revealed that the Corporations Act now captures major cryptocurrencies like Bitcoin and Ethereum. Additionally, the upcoming licensing framework will increase compliance obligations for crypto platforms operating in Australia. It would also mark a significant shift in the regulation of cryptocurrencies.
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