The Australian Federal Court has ordered Oztures Trading, trading as Binance Australia Derivatives (Binance), to pay a A$10 million pecuniary penalty after misclassifying over 85% of its Australian clients over nine months, resulting in more than A$12 million in losses and fees.
According to the Australian Securities and Investments Commission (ASIC), in a Statement of Agreed Facts, Binance admitted it exposed 524 retail investors to high-risk crypto derivative products without required consumer protections between July 2022 and April 2023, due to misclassifying them as wholesale clients.
Failures in client onboarding and staff training allowed clients seeking sophisticated investor status to repeatedly retake a multiple-choice quiz until they passed.
Senior compliance staff also provided inadequate oversight of applications and supporting documents.
In one case, a client was incorrectly assessed as a professional investor based solely on claiming to be an ‘exempt public authority’.
Misclassified clients incurred A$8.66 million in trading losses and paid A$3.89 million in fees.
Justice Moshinsky also ordered Binance to contribute to the Australian Securities and Investments Commission’s (ASIC) costs.
The penalty adds to approximately A$13.1 million in compensation paid to affected clients, overseen by ASIC in 2023.
ASIC Chair Joe Longo said,
“Binance failed to set up basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products. This wasn’t just a technical breach, it directly resulted in over A$12 million in client losses.”
Binance admitted it failed to provide Product Disclosure Statements, make Target Market Determinations, maintain a compliant internal dispute resolution system, comply with license conditions, ensure employee competency, and provide financial services efficiently, honestly, and fairly.
Longo added,
“This is a clear warning to global financial services entities setting up in Australia. All companies must follow the law from day one, with proper client onboarding systems and processes, including those dealing with crypto and digital assets.”
Featured image credit: Edited by Fintech News Australia, based on image by eaktopapps via Freepik
