The Australian Securities and Investment Commission (ASIC) yesterday announced that it has filed a lawsuit against Binance’s local derivatives business, alleging that it had violated consumer protection laws by wrongly classifying retail customers as wholesale clients.
According to the ASIC, Binance’s unit offered crypto derivative products to 505 retail investors, accounting for 83% of its local clients, between July 2022 and April 2023. The unit, Binance Australia Derivatives, had its financial services license cancelled in April 2023 after a targeted review by the regulator.
In November 2023, the ASIC oversaw compensation of approximately A$13.1 million ($8.29 million) to 435 retail clients who had been incorrectly classified as wholesale.
Sarah Court, Deputy Chair of ASIC, stated that these crypto derivative products are highly risky and complex, and it is crucial for retail clients to be classified correctly in order to receive the necessary consumer protections.
