The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, accusing the platform of failing to protect consumers.
The authority alleges that Binance wrongly classified more than 500 retail customers as wholesale investors between July 2022 and April 2023. Binance reportedly denied them basic protections under Australian financial laws.
Another Lawsuit Against Binance Over Regulatory Non-Compliance
According to ASIC, retail clients are entitled to greater protections, including a Product Disclosure Statement (PDS), Target Market Determination (TMD), and access to internal dispute resolution mechanisms.
Vice President Sarah Court criticized Binance’s compliance practices, calling them “woefully inadequate.” She said many customers have suffered significant financial losses due to a lack of adequate protections.
“ASIC will continue to use its full range of regulatory and enforcement tools to protect consumers and maintain market integrity in the digital assets sector,” said Sarah Court.
The lawsuit alleges several violations, including Binance’s failure to issue mandatory PDS and TMD documentation, inadequate dispute resolution systems, and inadequate employee training on regulatory compliance.
The authority also accused Binance of failing to conduct its business “competently, honestly, and fairly.” It will now seek sanctions, declarations, and negative publicity orders through this lawsuit.
In April 2023, following a review of its operations, Binance’s Australian financial services license was revoked. ASIC said the revocation came at Binance’s request.
Former Binance CEO CZ wrote in 2023: "There is some misinformation (and confusion) about #BinanceAustralia. We requested to revoke our derivatives license yesterday. The exchange had exactly 104 users as of yesterday. Binance_AUS will continue to operate the spot exchange in AU."
These legal actions highlight ASIC’s increased focus on regulating the cryptocurrency industry. Most recently, the authority fined Australian operator Kraken $12.8 million for compliance violations.
Another Australian agency, AUSTRAC, has also stepped up its monitoring of cryptocurrency ATMs. The agency will require operators to conduct strict KYC checks, monitor transactions, and report cash withdrawals over $10,000.
Globally, Binance continues to face mounting legal challenges. The Indian government has accused the platform of owing $85 million in unpaid taxes.
In the UK, a former Binance employee has filed a whistleblower lawsuit, alleging that a colleague solicited a bribe from a customer to receive preferential treatment. The whistleblower also claims unfair dismissal after reporting misconduct.
The lawsuit against Binance Australia more broadly reflects the increasing regulatory pressure on cryptocurrency platforms as governments step up efforts to enforce compliance with financial laws.
