The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Binance Australia Derivatives, accusing the platform of misclassifying retail investors and denying them essential consumer protections. Between July 2022 and April 2023, Binance classified over 500 retail clients—83% of its Australian customer base—as wholesale investors, according to the agency’s statement.
The error stripped these investors of crucial legal protections under Australian financial laws and exposed them to high-risk financial products, the regulator said Wednesday. Under Australian regulations, retail clients are entitled to consumer protections such as a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and access to an internal dispute resolution system.
ASIC alleges Binance failed to provide these safeguards, allowing clients to trade speculative and complex crypto derivative products without adequate support. The Australian regulator claims Binance violated multiple obligations, including its duty to operate efficiently, honestly, and fairly under its Australian financial services license.
ASIC also accused the platform of failing to train its employees adequately and neglecting the conditions of its license. It also claimed that Binance’s internal systems failed to deliver the protections required for retail investors. The crypto exchange reportedly compensated affected clients with approximately $13 million in 2023.
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