The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, a cryptocurrency derivatives trading platform, alleging serious consumer protection breaches.
In a press release on December 18, the agency claimed that Binance had wrongly classified more than 500 retail customers as professional investors between July 2022 and April 2023, thereby depriving them of the legal protections they enjoyed under Australian financial law.
Consumer Protection Allegations
In the filing, ASIC asserts that retail customers are entitled to stronger consumer protections, including access to Product Disclosure Statements (PDS), Target Market Determinations (TMDs), and internal dispute resolution processes.
ASIC Vice Chair Sarah Court criticized Binance's compliance systems, describing them as “wholly inadequate,” and said many customers suffered large financial losses due to a lack of proper safeguards.
Alleged violation of regulations
The lawsuit alleges a number of regulatory breaches, including Binance’s failure to provide a PDS or TMD, inadequate dispute resolution mechanisms, and a lack of staff training to ensure compliance with its financial services license. ASIC also alleges Binance failed to provide services in an “efficient, honest and fair manner.”
In April 2023, after reviewing the crypto exchange’s operations, ASIC revoked Binance’s financial services license in Australia “following a revocation request from the institution.”
ASIC to require cryptocurrency licensing
The case reflects ASIC’s growing focus on the cryptocurrency industry. The agency recently fined the Australian operator of Kraken $12.8 million for regulatory breaches. ASIC is also preparing new guidelines that would require cryptocurrency exchanges to obtain a financial services license under the Corporations Act.
In September, ASIC Commissioner Alan Kirkland said the agency was preparing new guidance requiring cryptocurrency exchanges to obtain a financial services license.
Licensing requirements are expected to extend beyond digital currency exchanges, according to The Australian Financial Review (AFR).
Kirkland revealed the agency’s plans at the AFR’s Crypto and Digital Assets Summit in Sydney on September 23, saying the agency views the Corporations Act as covering major crypto assets such as Bitcoin (BTC) and Ether (ETH).
Meanwhile, Binance is facing intellectual property theft charges in the United States.
Mark Longo, owner of Peanut the Squirrel, has sent a cease and desist letter to Binance, alleging trademark infringement regarding his memecoin PNUT.
