Binance Australia Hit With $6.9M Fine After Investors Lose Millions on Derivatives

The Australian Federal Court has ordered Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, to pay a fine of AUD $10 million (approximately $6.9 million USD) after the exchange admitted to exposing 524 retail investors to risky crypto derivatives without requisite consumer protections.

The misclassification occurred between July 2022 and April 2023, with Binance admitting that errors were made in customer onboarding, allowing retail customers to make unlimited attempts at a multiple-choice quiz until they achieved a passing score to qualify as advanced investors. ASIC announcement.

The misclassified customer group suffered AUD$8.66 million (approximately $6 million) in trading losses and paid AUD$3.89 million ($2.67 million) in fees. Of the 524 misclassified clients, 460 were misclassified as meeting the Sophisticated Investor Test, 33 as meeting the Individual Wealth Test, 26 as professional investors, 4 as Related Body Corporate and 1 as meeting the Large Business Test.

In one example, Binance judged an individual as a professional investor based solely on his claim to be an ‘exempt government entity’, without adequate verification.

“Binance failed to put basic compliance controls in place and wrongly approved hundreds of applications for complex, wholesale investor products,” ASIC chairman Joe Longo said in a statement. “Binance’s shortcomings exposed more than 85% of their Australian customer base to risky products they should never have had access to, and without important consumer protections or rights, costing retail investors millions.”

Judge Moshinsky also ordered Binance to contribute to ASIC’s costs, with the fine in addition AUD$13.1 million as compensation already paid to affected customers in 2023.

“The issue was self-identified, reported to ASIC and fully resolved in 2023, with approximately AUD 13 million compensated to affected users. Oztures ceased its derivatives business and voluntarily returned its AFSL in 2023,” a Binance spokesperson said. Declutter. “Binance Australia is committed to providing users in Australia with innovative, compliant and trusted products, while helping to promote the responsible growth of the country’s blockchain and digital asset ecosystem.”

Editor’s note: This story has been updated with commentary from Binance.