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The Federal Court of Australia has imposed an administrative fine of 10 million Australian dollars (approximately $6.9 million) on Binance Australia Derivatives. This platform provides cryptocurrency derivatives. It is accused of violations that resulted in significant losses for clients and inflated fees.
Binance acknowledged that due to these violations, 524 retail clients gained access to complex financial products, according to the Australian Securities and Investments Commission (ASIC). These 524 clients incurred trading losses amounting to 8.66 million Australian dollars (around $5.96 million) and paid an additional 3.89 million Australian dollars (approximately $2.68 million) in fees. In addition to the fine, Binance is required to compensate affected clients a total of $13.1 million.
The court determined that Oztures Trading Pty, which operated the crypto platform, incorrectly classified over 85% of its Australian clients as corporate investors from July 2022 to April 2023. Consequently, hundreds of retail traders were able to access high-risk crypto derivatives without the protections and guarantees mandated by Australian laws for private clients.
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ASIC claims that the violations were due to errors in the client registration system, inadequate compliance oversight, and insufficient staff training. Clients wishing to verify as qualified investors could repeatedly take a test with multiple-choice answers until they achieved the passing score necessary for compliance assessment.
Furthermore, senior compliance officers at Binance failed to monitor client applications and their accompanying documentation, according to Australian officials. The regulator cited an instance where the exchange mistakenly classified a client as a professional investor based solely on the individual’s claim of “exemption from licensing by a government authority,” without verifying the information.
“Binance failed to conduct basic checks, erroneously approving hundreds of applications for complex products intended for wholesale investors. More than 85% of the exchange’s Australian client base accessed high-risk products that they should never have been allowed to use. This was not merely a technical violation — the exchange’s errors directly resulted in multi-million dollar losses for clients,” stated ASIC Chairman Joe Longo.
In 2023, ASIC revoked the financial services license of Binance Australia Derivatives. However, in January, the Australian division of Binance resumed accepting deposits and withdrawals in Australian dollars for verified users.
