Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), has filed a case against Binance
$24.51B
Australia Derivatives.
The crypto exchange is accused of mislabeling over 500 retail customers as wholesale investors, which denied them key legal protections.
According to ASIC, this issue occurred between July 2022 and April 2023.
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These retail customers made up 83% of Binance’s Australian users during that period. The misclassification meant they lost access to important safeguards under Australian financial laws, leaving them exposed to high-risk financial products.
ASIC Deputy Chair Sarah Court criticized Binance’s practices, calling the company’s systems “woefully inadequate”. She then added:
Crypto derivative products are inherently risky and complex, so it is critical that retail clients are classified correctly.
Retail investors in Australia are entitled to protections such as a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and access to an internal dispute resolution system.
The PDS explains financial products’ features, risks, and benefits, while the TMD ensures products are offered only to suitable customers.
ASIC alleges Binance did not provide these protections. As a result, customers could trade speculative crypto derivative products without the information and support required by law.
The regulator also accuses Binance of neglecting to train its staff properly and not meeting the conditions of its financial license. ASIC further claims that Binance failed to meet its legal obligations as a licensed financial services provider.
In response, Binance compensated affected customers with around $13 million in 2023.
As ASIC pursues Binance over alleged investor misclassification in Australia, the crypto exchange is dealing with more legal issues. Recently, the owner of Peanut the Squirrel, Mark Longo, sued Binance over copyright violations. What led to this accusation? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
