The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against derivatives exchange Binance Australia, owned by Oztures Trading Pty Ltd, for alleged non-compliance with consumer protection measures. ASIC alleges that Binance Australia misclassified more than 506 customers as wholesale customers instead of retail customers.
ASIC Deputy Chair Dr Sarah Court noted that Binance failed to ensure that the services provided under its Australian financial services license were efficient, fair and equitable. This raises questions about Binance’s ability to comply with consumer protection regulations in Australia, especially in an increasingly regulated cryptocurrency market.
According to ASIC, between July 7, 2022 and April 21, 2023, Australian retail customers were misclassified as 83.5% of Binance's total customers in the country. This has left many investors without basic protections such as access to disclosure statements and regulatory dispute resolution mechanisms.
In addition, ASIC also found that Binance Australia failed to implement its Target Market Determination (TMD) under its design and distribution obligations, which further increased the seriousness of the alleged breach. Binance’s compliance system was found to be inadequate, exposing investors to high-risk speculative products without adequate safeguards.
The issue goes beyond allegations. In June 2023, Binance Australia had to stop accepting deposits and withdrawals in Australian dollars via bank transfers, reflecting the challenges the exchange is facing in the Australian market.
Notably, ASIC previously revoked Binance Australia’s derivatives license in April 2023 after finding the exchange misclassified traders as wholesale investors. This is the first indication that ASIC had any intention of controlling and regulating Binance’s operations in Australia prior to this lawsuit.
The litigation between ASIC and Binance Australia is not only a testament to the increasing regulatory oversight of the cryptocurrency market, but also a reminder of the responsibilities and obligations of exchanges in protecting investors’ interests. The public and investors will closely monitor the further developments of this lawsuit to assess the impact on the cryptocurrency market in general and Binance’s business operations in Australia in particular.
