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ASIC Takes Legal Action Against Binance Australia Over Misclassification of Retail Clients

ASIC Takes Legal Action Against Binance Australia Over Misclassification of Retail Clients

The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, accusing the crypto exchange of incorrectly classifying over 500 retail clients as wholesale investors.

This misclassification allegedly deprived these clients of essential consumer protections under Australian law, prompting the legal action that could significantly affect Binance’s operations in the country.

The lawsuit targets the period between July 2022 and April 2023, during which Binance reportedly classified 505 retail investors—who made up 83% of its Australian user base—as wholesale clients. By doing so, the exchange denied these clients critical protections that retail investors are entitled to, including access to Product Disclosure Statements (PDS), dispute resolution schemes, and Target Market Determinations (TMD). ASIC claims this misstep exposed these clients to high-risk, speculative trading without the necessary safeguards in place, resulting in substantial financial losses for many.


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ASIC’s legal filing highlights multiple regulatory failures by Binance, accusing the platform of failing to deliver its financial services in a fair and efficient manner. The commission also points out that Binance did not comply with its Australian financial services license requirements and failed to properly train its staff on compliance matters. Sarah Court, ASIC’s Deputy Chair, stressed that Binance’s inadequate compliance systems left over 500 clients exposed to significant unregulated risks, contributing to their financial losses.

This legal action follows a review by ASIC of Binance’s operations in Australia, which began in December 2022. As a result of the investigation, Binance requested the cancellation of its Australian financial services (AFS) license, which ASIC granted in April 2023. In addition to the lawsuit, ASIC has been working to ensure compensation for affected clients, helping to return around $13.1 million to those who were misclassified and lacked consumer protections.

The legal challenges for Binance extend beyond Australia, as the exchange is also facing a lawsuit from the estate of the collapsed FTX exchange. FTX alleges that Binance, along with CEO Changpeng Zhao, engaged in fraudulent dealings involving a 2021 share transaction. Additionally, Binance is fighting accusations of intellectual property theft from the owner of the Peanut the Squirrel trademark.

Author
Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.

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