Australia's ASIC files lawsuit against Binance's local derivatives unit

The watchdog alleges that retail clients were improperly classified as wholesale customers, resulting in a denial of consumer protections. The ASIC claims that between July 2022 and April 2023, Binance Australia Derivatives provided crypto derivative products to 505 retail investors, constituting approximately 83% of its local customer base, who were inaccurately labelled as wholesale clients. 

In April 2023, ASIC revoked Binance Australia Derivatives' financial services licence after conducting a targeted review of the cryptocurrency platform. Subsequently, in November 2023, the regulator oversaw compensation of around AUD 13.1 million (USD 8.29 million) to 435 retail investors affected by the misclassification. 

Regarding these new developments, ASIC officials emphasised the significance of proper oversight in such cases. Moreover, ASIC has announced its intent to pursue penalties, declarations, and adverse publicity orders in relation to the matter. At the time of writing, Binance has not issued a response to the lawsuit.

ASIC’s scrutiny of the crypto industry 

In a separate development from December 2024, Australia’s federal court imposed an AUD 8 million fine on Kraken’s local operator following civil proceedings initiated by ASIC, highlighting the regulator's ongoing scrutiny of the cryptocurrency industry. Specifically, The Federal Court of Australia ruled that the company breached financial regulations by failing to assess customer suitability and neglecting to provide a Target Market Determination (TMD), a document essential for ensuring products are appropriately matched to consumers’ needs. 

Earlier in August 2024, Australia's Federal Court found that Bit Trade Pty failed to meet margin trading product obligations. At the time, Bit Trade Pty, a subsidiary of US-based Payward Incorporated, faced civil proceedings initiated by ASIC in September 2023. The regulator alleged that Bit Trade did not perform a target market determination for the margin trading product before offering it to customers, despite prior concerns being raised.