Australian regulator files lawsuit against Binance
Date: 2024-12-19 Author: Gabriel Deangelo Categories: BUSINESS
According to ASIC’s application to the Federal Court, between July 2022 and April 2023, Binance allowed 505 Australian users, incorrectly classified as wholesale customers, to trade crypto derivatives. This error affected 83% of the platform’s users in the country. The regulator notes that retail customers who were not properly classified lost their right to legal protection.
ASIC emphasized that the exchange was required to accurately identify the target audience for its services. Failure to do so is a breach of local regulations. It also found that Binance’s Australian subsidiary did not have the necessary dispute resolution system in place that met the established standards. Moreover, the exchange’s employees were allegedly unqualified.
ASIC Deputy Chair Sarah Court noted that Binance, which is licensed in Australia, did not provide fair services. She emphasized that the exchange exposed its customers to significant financial risk by offering complex and highly speculative products without adequate protections. According to her, many customers suffered significant losses due to such actions by the platform.
“Proper classification of retail customers is critical, especially when dealing with high-risk products such as crypto derivatives,” Court said.
The Binance situation comes shortly after another high-profile case. ASIC recently fined Bit Trade, the operator of the Kraken exchange, $5 million for breaching margin trading rules. The regulator claims that Kraken failed to meet service requirements similar to the situation with Binance.
