Court action for crypto major
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ASIC is taking Binance Australia to court for allegedly leaving investors unprotected.
Between July 2022 and April 2023, Binance allegedly misclassified 505 retail clients as wholesale investors, depriving them of key safeguards under Australian financial laws.
These clients, who made up 83 per cent of Binance’s Australian user base, were left without crucial protections typically afforded to retail investors.
Retail clients trading crypto derivative products are entitled to rights such as access to a Product Disclosure Statement (PDS) and a compliant dispute resolution scheme.
These protections also include obligations for providers to make a Target Market Determination under financial services laws.
ASIC’s Deputy Chair Sarah Court has described Binance’s compliance as “woefully inadequate”, stating that the firm had exposed clients to speculative, high-risk products without adequate consumer safeguards.
Many users suffered significant financial losses during this period, prompting Binance to pay approximately $13 million in compensation in 2023.
The lawsuit highlights a series of alleged failings, including Binance’s inability to meet licensing obligations, implement proper dispute resolution processes, and ensure employees were trained to deliver financial services in a fair and efficient manner. In April 2023, following a targeted review of Binance’s operations, ASIC cancelled its Australian Financial Services (AFS) licence at Binance’s request, a move that followed months of regulatory scrutiny.
ASIC’s actions reflect a broader push to regulate the digital asset industry.
Earlier this year, it took similar action against the operator of the Kraken exchange for breaches of design and distribution obligations.
The regulator is also working to clarify how existing financial product definitions apply to digital assets.
As part of the global Binance group, one of the largest cryptocurrency exchanges by trading volume, Binance Australia Derivatives now faces penalties, declarations, and orders for adverse publicity if ASIC’s case succeeds.
