Binance's Australian Division Hit with $6.9M Fine for Improper Customer Classification
Binance Australia Derivatives faces a court-mandated penalty of $6.9 million for incorrectly categorizing retail customers and allowing their exposure to risky cryptocurrency derivative products.
Australia's Federal Court has imposed a financial penalty of 10 million Australian dollars ($6.9 million) on Oztures Trading Pty Ltd, which operates under the name Binance Australia Derivatives, following the firm's acknowledgment that it incorrectly classified over 85% of its Australian customers and allowed retail traders access to high-risk cryptocurrency derivatives products without the mandatory safeguards in place.
According to the Australian Securities and Investments Commission (ASIC), the impacted cohort consisted of 524 retail traders who were improperly designated as wholesale clients throughout the period spanning July 2022 to April 2023. These same clients subsequently suffered $6.3 million in losses from trading activities and were charged $2.6 million in various fees.
In a statement containing agreed-upon facts, Binance also acknowledged a series of regulatory compliance shortcomings, including the failure to supply product disclosure statements to retail customers, the absence of a target market determination, and the lack of a compliant internal system for resolving disputes.
This financial sanction is in addition to the approximately $9 million in restitution payments that the local derivatives division of Binance was directed to distribute to impacted customers back in November 2023.
Cointelegraph reached out to Binance for comment but had not received a response at the time of publication.
This is a developing story, and further information will be added as it becomes available.