The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, accusing the platform of failing to uphold consumer protection standards.
The regulator alleges that between July 2022 and April 2023, Binance wrongly classified more than 500 retail clients as wholesale investors, a decision that stripped these individuals of vital legal protections under Australian financial laws. ASIC claims that retail clients are entitled to stronger protections, which include access to important documents like the Product Disclosure Statement (PDS), the Target Market Determination (TMD), and dispute resolution services. The regulator took aim at Binance’s compliance practices, criticizing them as insufficient and pointing to substantial financial losses experienced by clients as a result.
According to the complaint, Binance is accused of multiple regulatory failures, including not providing the necessary PDS or TMD, lacking proper mechanisms for resolving disputes, and insufficient employee training on compliance matters. Furthermore, ASIC asserts that Binance failed to conduct its business in an “efficient, honest, and fair” manner. In response to these issues, ASIC revoked Binance’s financial services license in April 2023, following the company’s request for cancellation.
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This lawsuit highlights ASIC’s intensified focus on the cryptocurrency industry. The commission has also recently imposed a hefty fine on Kraken’s Australian arm for similar breaches. In addition, ASIC is drafting new regulations that would require crypto exchanges to obtain financial services licenses under the Corporations Act, with plans to apply these requirements to a broader range of digital assets beyond just exchanges.
