Coin Edition -
- Australian Securities and Investments Commission is investigating Binance Australia’s derivatives business.
- 500 Australian users affected by Binance’s misclassification error will be compensated.
- Binance did not report incidents to ASIC under license obligations.
The Australian Securities and Investments Commission (ASIC) announced on Friday that it is investigating Binance Australia’s derivatives business more closely. Following Binance’s admission that 500 of its Australian customers had been incorrectly classified as “wholesale investors,” their derivative holdings were terminated.
Moreover, Retail traders are not allowed to trade financial derivatives or futures due to local regulations.
Historically, Binance Australia has only allowed “wholesale” traders to trade futures and financial derivatives on their platform in compliance with local laws. However, Binance announced on Thursday that it wrongly labeled 500 Australian customers as “wholesale investors,” which led to the cancellation of their derivative contracts.
However, the leading crypto exchange in the world tweeted that 500 Australian users were affected by the error. The business said it is now in contact with the affected users to negotiate compensation plans.
500 users were affected by this remediation, which was a necessary action to ensure we stay compliant with local laws. We serve over 120 million users globally and every user is important to us. We are in contact with the affected users to firm up our compensation plans for them.— Binance (@binance) February 23, 2023
An ASIC representative stated that Binance Australia’s “classification of retail clients and wholesale clients” is included in the ongoing review being performed by the Australian markets regulator. Furthermore,
ASIC is aware of Binance’s social media posts overnight stating that it had incorrectly classed a group of Australian consumers as wholesale investors.
The spokesperson shared that ASIC has acknowledged Binance’s recent social media posts acknowledging the misclassification of a group of Australian consumers as “wholesale investors.” However, as of now, Binance has not reported these incidents to ASIC in accordance with the obligations under its Australian Financial Services Licence.
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