The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Binance Australia Derivatives, alleging that the company misclassified over 500 retail investors as wholesale clients. This misclassification, which occurred between July 2022 and April 2023, reportedly deprived these investors of essential consumer protections typically provided under Australian financial services regulations.
According to ASIC’s documents filed in the Federal Court, more than 500 retail clients of Oztures Trading Pty Ltd, operating as Binance Australia Derivatives, were denied critical consumer protections due to being incorrectly classified as wholesale clients. ASIC’s focus on compliance and consumer protection in the cryptocurrency market is highlighted by this complaint, particularly concerning high-risk derivative products.
In response to these allegations, Binance has already compensated the affected clients with a substantial amount of approximately A$13.1 million (US$8.29 million). However, this compensation does not exempt the exchange from potential further legal obligations. ASIC is currently investigating additional penalties, disclosures, and adverse publicity orders against Binance to stress the importance of strict compliance policies and accurate client classification.
This legal action against Binance is part of ASIC’s broader effort to uphold consumer protection regulations in Australia’s rapidly expanding cryptocurrency market through compliance measures. Another recent case involving a local operator of Kraken being fined A$8 million by Australia’s federal court in December 2024 further reinforces the regulator’s stance on non-compliance and the necessity to safeguard consumer rights.
As the regulatory scrutiny of digital asset products intensifies, ASIC’s activities aim to address structural issues in the digital asset sector and create a safer environment for retail investors. Additionally, ASIC’s publication of draft rules outlining the application of the Corporations Act 2001 to digital assets signifies a proactive approach to enhancing consumer protection for digital asset services and raising compliance standards.