ASIC Files Lawsuit Against Binance Australia for Misclassifying Retail Clients
Australian regulator ASIC has filed a lawsuit against Binance Australia Derivatives for misclassifying over 500 retail clients as wholesale investors from July 2022 to April 2023, allegedly depriving them of essential legal protections.
Retail clients in Australia are entitled to safeguards such as a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and access to dispute resolution systems. ASIC Deputy Chair Sarah Court stated that Binance’s compliance was “woefully inadequate,” noting that many clients experienced significant financial losses due to these failures. ASIC is committed to using all regulatory tools to protect consumers and ensure market integrity.
The lawsuit claims Binance failed to fulfill several obligations, including issuing mandatory PDS and TMD documents, maintaining adequate internal dispute resolution systems, and training employees on regulations. ASIC accused Binance of not conducting its business “efficiently, honestly, and fairly.” The regulator seeks penalties, declarations, and orders for adverse publicity.
In April 2023, Binance’s Australian financial services license was canceled following an ASIC review. Binance indicated it had requested the cancellation, citing only 104 users on its derivatives platform at that time. The spot trading platform remains operational in Australia.
This lawsuit is part of a broader regulatory initiative targeting crypto platforms. Recently, Kraken’s Australian operator faced a $12.8 million fine for compliance breaches, and AUSTRAC implemented stricter Know Your Customer (KYC) requirements for crypto ATMs, mandating transaction monitoring and reporting of withdrawals over $10,000.
Globally, Binance confronts various legal challenges. The Indian government has accused the platform of owing $85 million in unpaid taxes. In the UK, a whistleblower lawsuit alleges that a former employee solicited a bribe from a customer and was subsequently terminated for reporting the misconduct. These legal pressures reflect increasing efforts by governments to enforce stricter compliance within the crypto industry.
ASIC’s legal action against Binance emphasizes the growing scrutiny on crypto platforms as regulators strive to ensure adherence to financial laws and consumer protection. This case illustrates the ongoing challenges for the crypto industry in meeting regulatory expectations.