ASIC sues Binance Australia over investor misclassification and protections
The Australian Securities and Investment Commission (ASIC) has filed a lawsuit against Oztures Trading Ltdthe operator of Binance Australia Derivativesover inadequate customer protection practices.
According to a Dec. 18 statement, the regulator claims that over 500 retail investors were misclassified as wholesale clients, denying them crucial consumer safeguards.
ASICs allegations
ASIC alleged that between July 2022 and April 2023, Binance offered crypto derivative products to 505 Australian retail investors, representing 83% of its local client base, while misclassifying them as wholesale clients.
This classification bypassed mandatory protections under Australian financial laws, such as access to disclosure statements and dispute resolution mechanisms.
The regulator accused Binance of failing to issue a product disclosure statement, failing to determine a target market for its products, and not providing an adequate internal complaint resolution system.
ASIC Deputy Chair Sarah Court emphasized that Binances actions likely caused significant financial harm to its clients. She added that Binance had previously paid some affected users $13 million in compensation in 2023.
Court reiterated that the proper classification of retail clients is essential to ensure they receive the necessary information to make informed decisions in a highly risky market. She added:
Many digital assets and related products are financial products under the current law. We are consulting with the sector to improve regulatory clarity, and ASIC will continue to use the full range of regulatory and enforcement tools to safeguard consumers and uphold market integrity in the digital asset sector.
ASIC said it would seek penalties, declarations, and adverse publicity orders.
This lawsuit marks ASICs latest move to enforce compliance among crypto exchanges. Last week, the regulator scored a pivotal legal victory that fined Bit Trade, the operator behind Kraken Australia, $5 million for regulatory breaches involving an unlawful credit facility.
ASICs actions highlight its commitment to holding exchanges accountable to Australian financial laws.
The post ASIC sues Binance Australia over investor misclassification and protections appeared first on CryptoSlate.
Text source: CryptoSlate
