BCGAME - Free 5BTC Daily Bonus!Amid the cryptocurrency market frenzy last year, Binance, one of the world’s largest exchanges, was facing serious trouble with Australian regulators. The Australian Securities and Investments Commission (ASIC) recently charged Binance Australia Derivatives, a cryptocurrency derivatives platform, with a serious breach: misclassifying more than 500 retail investors as wholesale clients.
“More than 500 retail customers of Oztures Trading Pty Ltd, trading as Binance Australia Derivatives (Binance), have been denied important consumer protections after being misclassified as wholesale customers, ASIC alleges in documents filed with the Federal Court,” the regulator highlighted in its release official.
According to ASIC’s allegation, from July 7, 2022, to April 21, 2023, Binance offered cryptocurrency derivatives products to 505 Australian retail investors who were misclassified as wholesale clients, representing 83% of its Australian customer base.
ASIC Vice-Chair Sarah Court was not shy about criticizing Binance’s compliance systems, calling them “inadequate.” According to her, these errors have caused significant losses for many retail customers.
ASIC Deputy Chair Sarah Court said Binance allegedly failed to ensure that the services it provided under its Australian financial services license were provided efficiently, honestly and fairly. “Our case alleges that Binance’s compliance systems were woefully inadequate and exposed more than 500 customers to high-risk speculative products without the correct consumer protections in place. Many of these customers suffered significant financial losses. In 2023, we oversaw compensation payments by Binance of approximately $13 million to affected customers.”
Court followed up his statement by highlighting the importance of proper classification. “Cryptocurrency derivatives products are inherently risky and complex, so it is essential that retail clients are properly classified. Such classifications ensure that they receive the necessary consumer protections and information needed to make an informed investment decision.”
ASIC alleged that Binance, in the period from July 2022 to April 2023, failed to: provide a Product Disclosure Statement to retail customers; make a target market determination; have a compliant internal dispute resolution system; do all things reasonably necessary to ensure that its financial services are provided efficiently, honestly and fairly; comply with the conditions of its licence; and ensure that its employees are adequately trained and competent.
At the time of publication, Binance had not commented on the matter.
