Australian Court Fines Binance Australia for Misclassifying Clients

• An Australian court sanctioned Binance Australia for wrong client classification.
• The court said Binance Australia exposed the clients to high risks without protection.
• Binance Australia settled affected clients in 2023 over a similar issue via compensation.

An Australian federal court fined Binance Australia Derivatives A$10 million ($6.9 million) for misclassifying retail users as wholesale investors. Regulators said the failure exposed clients to high-risk crypto derivatives without proper protections. 

Binance Australia Misclassified 85% of Its Clients

According to reports, an Australian federal court has ordered a Binance Australia derivative to pay A$10 million, equivalent to $6.9 million, for misclassifying over 85% of its Australian clients. According to Australia’s securities regulator, the act by the platform exposed those clients to high-risk crypto products.

The penalty meted out to Binance Australia Derivatives is the outcome of a lawsuit that began in 2024, when the Australian Securities and Investment Commission (ASIC) alleged undue client exposure without required protections. 

Meanwhile, the federal court discovered that between July 2022 and April 2023, Binance Australia improperly classified 524 retail investors as wholesale clients, granting them access that exposed them to significant risks.

Clients Suffered Losses and Paid Fees

According to ASIC, the onboarding failure by Binance Australia Derivatives led to the misclassified group incurring A$8.7 million in trading losses and paying A$3.9 million in fees. Following the allegation, Binance Australia acknowledged serious lapses in its operations. 

According to the firm, it had issues with client onboarding and staff training that allowed users to repeatedly attempt a multiple-choice test until they achieved a score qualifying ​as sophisticated investors.

One of the cited cases, Binance Australia, onboarded an acclaimed self-certified professional describing himself as an “exempt public authority” without proper verification. 

Binance Previously Paid Compensation

The penalty follows earlier compensation. Binance Australia paid around A$13.1 million to affected users in 2023 after identifying the issue internally.

The exchange said it has since improved onboarding processes and staff training to prevent similar incidents. The case highlights growing regulatory scrutiny of crypto derivatives platforms globally.

Related: Binance Australia Restores Banking Access to Users After Over Two Years