Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), has filed a case against Binance
The crypto exchange is accused of mislabeling over 500 retail customers as wholesale investors, which denied them key legal protections.
According to ASIC, this issue occurred between July 2022 and April 2023.
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These retail customers made up 83% of Binance’s Australian users during that period. The misclassification meant they lost access to important safeguards under Australian financial laws, leaving them exposed to high-risk financial products.
ASIC Deputy Chair Sarah Court criticized Binance’s practices, calling the company’s systems "woefully inadequate". She then added:
Crypto derivative products are inherently risky and complex, so it is critical that retail clients are classified correctly.
Retail investors in Australia are entitled to protections such as a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and access to an internal dispute resolution system.
The PDS explains financial products' features, risks, and benefits, while the TMD ensures products are offered only to suitable customers.
ASIC alleges Binance did not provide these protections. As a result, customers could trade speculative crypto derivative products without the information and support required by law.
The regulator also accuses Binance of neglecting to train its staff properly and not meeting the conditions of its financial license. ASIC further claims that Binance failed to meet its legal obligations as a licensed financial services provider.
In response, Binance compensated affected customers with around $13 million in 2023.
As ASIC pursues Binance over alleged investor misclassification in Australia, the crypto exchange is dealing with more legal issues. Recently, the owner of Peanut the Squirrel, Mark Longo, sued Binance over copyright violations. What led to this accusation? Read the full story.
