A Federal Court in Australia has ordered Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, to pay an AUD$10 million (US$6.86 million) penalty after misclassifying more than 85% of its Australian client base over a nine-month period, resulting in more than AUD$12 million (US$8.24 million) in losses and fees.
In a ‘Statement of Agreed Facts’, Binance Australia Derivatives—which is a part of the Binance Group, the world’s largest digital asset exchange by trading volume—admitted it exposed 524 retail investors to high-risk digital currency derivative products without the required consumer protections between July 2022 and April 2023, due to their misclassification as wholesale clients.
In doing so, the company also failed to comply with multiple regulatory obligations, including providing a ‘Product Disclosure Statement’ to retail clients, making a ‘Target Market Determination,’ maintaining a compliant internal dispute resolution system, and adequately training employees and ensuring their competency.
In a statement released last March 27 after the fine and court order were announced, the Australian Securities and Investments Commission (ASIC), the country’s top financial services watchdog, said Binance had failed to “ensure financial services were provided efficiently, honestly, and fairly.”
The Federal Court decision is the result of an investigation dating back to December 2022, when ASIC began a targeted review of Binance’s financial services business, including its classification of wholesale clients. This culminated in the regulator issuing a notice of hearing to consider whether the company’s Australian Financial Services (AFS) license should be cancelled or suspended. ASIC subsequently cancelled the license in April 2023.
“Binance failed to set up basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products,” said ASIC Chair Joe Longo, in response to the March 27 outcome. “Binance’s shortcomings left more than 85% of their Australian customer base exposed to high-risk products they should have never been able to access, and without important consumer protections or rights, costing retail investors millions.”
He added that “this is a clear warning to global financial services entities looking to set up shop in Australia… All financial services companies must follow the law from day one, and have proper client onboarding systems and processes in place.”
Binance isn’t the first global digital asset exchange operator to be on the receiving end of ASIC enforcement. In 2024, the regulator took Bit Trade Pty Ltd—the operator of the Kraken digital asset exchange in Australia—to court for failures in its design and distribution obligations, with the Federal Court also ruling in ASIC’s favor.
On Friday, the regulator said it would “continue to use its full range of regulatory and enforcement tools,” such as guidance, licensing, compliance and enforcement action, “to protect consumers and uphold market integrity in the digital asset sector.”
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Source: https://coingeek.com/binance-australia-fined-6-9m-over-trading-losses/
