Legal action against Binance Australia Derivatives has been started by the Australian Securities and Investments Commission (ASIC), alleging that the crypto exchange neglected to give enough consumer protections for retail customers. A Dec. 18 news release claims that ASIC claims Binance Australia misclassified over 500 retail customers as “wholesale clients,” therefore exposing them to high-risk crypto assets without the necessary protections.
Businesses under Australian financial services rules have to give retail customers access to a compliant dispute resolution system and a product disclosure statement. ASIC argues, however, that between July 7, 2022, and April 21, 2023 Binance neglected to fulfil these requirements for 83% of its Australian customers.
Later cancelled in April 2023, ASIC Deputy Chair Sarah Court chastised Binance for failing to follow its responsibilities for its Australian financial services licence. “Many of these clients incurred major financial losses. Court said in 2023 we supervised Binance’s payouts of around $13 million to impacted clients.
The regulator further charged Binance with several shortcomings including:
Ignoring the need of deciding a target market.
Without a compliant internal conflict settlement mechanism.
using employees supposedly incapable of performing wholesale client assessments.
Seeking penalties, declarations, and adverse publicity orders, ASIC has said it intends to pursue more legal action. “We are working with the sector to improve regulatory clarity; ASIC will keep using the whole spectrum of regulatory and enforcement tools to protect consumers and uphold market integrity in the digital asset sector,” Court said.
The Australian branch of Binance has come under increasing legal investigation this year. Following a cancellation request from the company, ASIC revoked the Australian financial services (AFS) licence of Binance Australia Derivatives in April 2020. Australian officials searched Binance Australia’s derivatives business later in July in line with ASIC’s enquiry into claims of incorrectly identifying retail clients as wholesale accounts—who are susceptible to reduced degrees of regulatory protection.
This legal action underlines the continuous efforts of Australian authorities to ensure compliance and safeguard consumers in the fast changing digital asset industry.
