An Australian federal court has ordered the local subsidiary of Binance to pay a fine of 10 million Australian dollars (equivalent to $6.9 million), as announced by the country's securities regulator on Friday. The penalty was issued because the firm incorrectly categorized more than 85% of its Australian clients, exposing these investors to potentially high-risk cryptocurrency products.
The legal action was initiated by the Australian Securities and Investments Commission (ASIC) in late 2024, alleging that this misclassification allowed retail investors to access high-risk crypto derivatives without the necessary safeguards.
Binance Australia Derivatives, a unit of the world's largest cryptocurrency exchange by trading volume, acknowledged the compliance failures in an agreed statement of facts with ASIC.
The Federal Court of Australia found that between July 2022 and April 2023, Binance Australia improperly classified 524 retail investors as wholesale clients, enabling them to trade "high-risk" crypto derivatives without statutory investor protections.
This misclassification resulted in trading losses of 8.7 million Australian dollars for the affected client group, along with 3.9 million Australian dollars in transaction fees.
Binance Australia admitted to serious deficiencies in its customer onboarding reviews and staff training, which permitted users to repeatedly take multiple-choice tests until they achieved scores meeting the qualified investor threshold.
In one instance, a customer was wrongly designated as a professional investor based solely on a self-declaration as an "exempt public authority," without proper verification.
ASIC noted that the fine is an additional penalty, as Binance Australia had already paid approximately 13.1 million Australian dollars in compensation to affected customers in 2023.
Binance Australia stated, "The issue was self-identified and reported to ASIC, and a comprehensive remediation was completed in 2023."
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