Originally published on: December 18, 2024
The Australian Securities and Investments Commission (ASIC) is taking legal action against Binance Australia Derivatives, a crypto derivatives trading platform, for allegedly breaching consumer protection regulations.
According to ASIC’s announcement on December 18, the regulator accuses Binance of misclassifying more than 500 retail clients as wholesale investors between July 2022 and April 2023, depriving them of the protections guaranteed under Australian financial laws.
ASIC Deputy Chair Sarah Court criticized Binance’s compliance systems as “woefully inadequate,” pointing out that many clients suffered significant financial losses due to the lack of proper protections.
The lawsuit outlines several violations, including the failure to provide a Product Disclosure Statement (PDS) or a Target Market Determination (TMD), insufficient dispute resolution processes, and a lack of employee training for compliance with the financial services license.
In April 2023, ASIC canceled Binance’s Australian financial services license following a review of its operations in response to a request from the platform.
This legal action is part of ASIC’s increased scrutiny of the crypto industry, with recent fines imposed on other operators. ASIC also plans to introduce new guidelines requiring crypto exchanges to obtain financial services licenses under the Corporations Act, extending the licensing requirements to major crypto assets like Bitcoin and Ether.
Meanwhile, Binance is facing accusations of intellectual property theft in the United States, with the owner of Peanut the Squirrel issuing a cease-and-desist letter over trademark infringement related to its PNUT-themed memecoin.
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