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Coporate agent ASIC cancels Binance Australia’s license after it misclassified retail investors, leaving them without consumer protection

The world’s largest cryptocurrency exchange can no longer legally operate in Australia after financial regulator ASIC canceled the company’s financial services license due to policy violations leaving consumers financially exposed.

Although it was licensed to sell financial derivatives to wholesale clients, Binance Australia Derivatives – the trading name of Oztures Trading Pty Ltd – was found to have sold the products to hundreds of retail clients, while inaccurately classifying them as wholesale clients.

Binance asked ASIC to revoke its license after it received notice on March 29 that the financial regulator had identified irregularities in the company’s operations and would hold a hearing to consider whether to cancel or suspend the license.

“It is critical that AFS licensees classify retail and wholesale customers in accordance with the law,” ASIC Chairman Joe Longo said in a statement when the cancellation was announced.

“Retail clients who trade crypto derivatives are granted important rights and consumer protections under Australia’s financial services laws… Our focused assessment of these matters is ongoing, including focusing on the extent of harm to consumers.”

One of the concerns is whether clients had access to third-party dispute resolution through the Australian Financial Complaints Authority – an option offered to retail but not wholesale clients.

Other rights granted to retail customers include access to Licensee’s internal dispute resolution systems; general advice warnings and advice statements where personal advice is given; financial services product statements and guides; obligations to market and distribute financial products with a “customer-centric approach”; and more.

By misclassifying its retail customers, Binance was effectively depriving them of this consumer protection — a particular problem in a “risky and complex” cryptocurrency market in which, ASIC said, “crypto users should be willing to lose all the funds they invest in crypto.”

Tighten the specified screws

Cancellation of Binance Australia Derivatives license means that clients of the company – the the world’s largest cryptocurrency exchange by a factor of 10 over the number two Coinbase Exchange – will be forced to close their derivative positions before April 21, when all remaining open positions will be closed.

This is not the first time ASIC has taken action against cryptocurrency operators: in the last quarter of 2022 alone, the company filed a civil suit against BPS Financial, Block Earner, and Finder Wallet for violations, including engaging in “unauthorized conduct”, alleged misleading statements and insufficient risk information.

It’s also not the first time Binance has faced regulatory concerns: indeed, the company was recently addressed by the US Commodities Futures Trading Commission (CFTC), which called time on the “deliberately opaque joint venture” and accused Binance founder Changpeng Zhao and former chief compliance officer Samuel Lim of knowingly ignoring the Commodity Exchange Act (CEA) of that country and “engage in a calculated strategy of regulatory arbitrage to their commercial advantage” by, among other things, not requiring customers to provide identification.

Binance also instructed employees to use a messaging application that would automatically delete written communications — a practice that, the CFTC alleges, was “to avoid leaving any evidence of their efforts to retain US-based customers.”

Executives were actively working “to both keep the money flowing and avoid compliance,” CFTC Chairman Rostin Behnam said, citing emails and chat transcripts that, he said, confirm Binance’s compliance efforts “have been a sham” and document executives’ continued efforts “to put profit before following the law”.

Likewise, unreliable practices have been documented and alleged by regulators in countries including the UK, Japan, Italy, Singapore, The Netherlands, CanadaAnd Thailand.

Binance Shares dropped by almost 7 percent after the CFTC announcement.

ASIC is ready to regulate crypto, Longo said when he expressed a desire for a regulatory framework “with a focus on consumer protection and market integrity.”


Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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