Regulatory Dispute: Binance Australia Faced with ASIC’s Legal Action Over Client Misclassification

ASIC Sues Binance Australia for Misclassifying Retail Investors

The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, accusing the exchange of failing to protect its users by misclassifying over 500 retail investors as wholesale clients. This move denies them essential consumer protections under Australian law.

According to ASIC’s allegations, between July 2022 and April 2023, Binance allowed retail investors to trade risky crypto derivative products without providing proper disclosure statements or access to dispute resolution schemes. This misclassification affected a staggering 83% of Binance’s Australian clients.

The regulatory body has accused Binance of not operating fairly and failing to comply with the requirements of its financial services license. ASIC Deputy Chair Sarah Court emphasized that Binance’s compliance systems were inadequate and non-transparent, leading many clients to suffer financial losses.

This lawsuit is a significant development in the ongoing crypto regulatory landscape, especially in Australia where there have been previous instances of similar misclassification. Just recently, ASIC fined Kraken, a major crypto platform, for offering illegal margin trading products, resulting in local traders losing over $8 million.

The incident serves as a stark reminder to investors of the importance of proper protection and the risks involved with trading crypto derivatives.

Source: coinpedia.org