ASIC Sues Binance Australia Derivatives

(Reuters) – Australia’s corporate watchdog, the Australian Securities and Investment Commission (ASIC), announced on Wednesday that it has sued the local derivatives business of cryptocurrency exchange Binance.

Allegations

The lawsuit alleges that Binance misclassified its retail customers as wholesale clients, denying them essential consumer protections. ASIC claims that between July 2022 and April 2023, the Binance unit offered crypto derivative products to 505 retail investors, representing about 83% of its local client base.

In April 2023, ASIC canceled the financial services license of Binance Australia Derivatives following a "targeted review" of its operations.

Compensation and Regulatory Action

In November 2023, ASIC supervised compensation amounting to approximately A$13.1 million ($8.29 million) to 435 retail clients who had been incorrectly classified as wholesale clients.

ASIC Deputy Chair Sarah Court emphasized the importance of correct classification for retail clients, given the inherent risks and complexities associated with crypto derivative products.

The regulator is seeking penalties, declarations, and adverse publicity orders against Binance. As of now, Binance has not provided a comment on the situation.

Context

Earlier this month, Australia’s federal court fined the local operator of crypto exchange Kraken A$8 million following ASIC's civil proceedings.