Publish: 12:01, 18 Dec, 2024

Australia sues Binance unit over consumer protection failures

Online Desk
Australia sues Binance unit over consumer protection failures
Illustration: Reuters

Australia's corporate watchdog, the Australian Securities and Investments Commission (ASIC), announced on Wednesday that it has taken legal action against the local derivatives business of cryptocurrency exchange Binance. The lawsuit alleges that Binance's Australian unit failed to provide consumer protections by misclassifying retail clients as wholesale clients, reports Reuters.

According to ASIC, the Binance unit offered crypto derivative products to 505 retail investors, approximately 83% of its local customers, who were wrongly classified as wholesale clients between July 2022 and April 2023. As a result, these clients were denied critical protections intended for retail investors.

In April 2023, ASIC revoked the financial services license of Binance Australia Derivatives following a "targeted review." In November 2023, the regulator oversaw the compensation of approximately A$13.1 million (US$8.29 million) to 435 retail clients who had been misclassified.

"Crypto derivative products are inherently risky and complex, so it is vital that retail clients are classified correctly to ensure they receive necessary consumer protections," said ASIC Deputy Chair Sarah Court. The regulator will seek penalties, declarations, and adverse publicity orders against the company.

Binance has not yet responded to the lawsuit. Earlier this month, Australia's federal court imposed an A$8 million fine on the local operator of crypto exchange Kraken following similar civil proceedings initiated by ASIC.

Bd-pratidin English/ Jisan

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