The Australian Securities and Investments Commission (ASIC) has accused Binance Australia Derivatives of misclassifying clients, exposing them to high financial risks.
Charges Against Binance
ASIC accused Binance of misclassifying over 500 retail clients as 'wholesale,' denying them necessary consumer protections. From July 7, 2022, to April 21, 2023, the exchange failed to provide the required documentation and access to a dispute resolution scheme, as mandated by Australian financial laws.
ASIC's Actions
ASIC Deputy Chair Sarah Court noted that Binance neglected client protection, resulting in significant financial losses. In 2023, the exchange compensated affected clients with approximately $13 million. ASIC plans further legal actions, including penalties and public orders.
Consequences for Binance
In April 2023, ASIC canceled the financial services license of Binance Australia Derivatives. In July 2023, Australian authorities raided Binance offices as part of an investigation. These actions were prompted by allegations of improper classification of retail clients as wholesale, who require higher protection.
The allegations against Binance highlight the need for stringent compliance with regulatory procedures to protect investors and maintain market integrity.
