According to reports from March 27, the Federal Court of Australia has imposed an A$10 million (appr. $6.9 million USD) civil penalty on Binance’s local branch, registered under the name Oztures Trading Pty Ltd.
The Australian Securities and Investments Commission (ASIC) said that Binance Australia’s derivatives platform misclassified over 500 investors as “wholesale clients.”
The regulator added that the process took place between July 2022 and April 2023, which exposed these clients to high-risk crypto-asset derivatives. Their losses were worth over A$12 million ($8.27 million USD).
Another local report informed that the company had admitted to “serious failure in client onboarding and poor staff training that allowed clients seeking to be verified as sophisticated investors to make unlimited attempts at a multi-choice quiz until they achieved a passing score for Binance to assess them as qualifying for sophisticated investor status.”
The company’s senior compliance staff failed to provide adequate oversight or review of client applications, which worsened the onboarding and classification processes.
One client reportedly wrote that they were an “exempt public authority,” without providing further verification, and Binance incorrectly assessed that they qualified as a professional investor.
The exchange also had to pay A$13.1 million ($12 million USD) as compensation to the affected users, which ASIC oversaw in 2023.
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“Binance failed to set up basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products. Binance’s shortcomings left more than 85% of their Australian customer base exposed to high-risk products they should have never been able to access, and without important consumer protections or rights, costing retail investors millions. ‘This wasn’t just a technical breach – it directly resulted in over $12 million in client losses,” commented ASIC’s Chair, Joe Longo.
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