The Federal Court of Australia has ordered Oztures Trading Pty Ltd, operating as Binance Australia Derivatives, to pay a $10 million penalty after the Australian Securities and Investments Commission (ASIC) found the cryptocurrency exchange had misclassified more than 85 per cent of its Australian clients.
Between July 2022 and April 2023, 524 retail investors were wrongly categorised as wholesale clients, stripping them of critical consumer protections and exposing them to high-risk cryptocurrency derivatives products they should never have been able to access. Those misclassified investors went on to suffer $6.3 million in trading losses and paid $2.6 million in fees during the period.
ASIC’s investigation revealed that Binance allowed users to repeatedly retake a multiple-choice questionnaire until they passed and qualified as “sophisticated” investors, effectively rendering the screening process meaningless. The company also failed to provide product disclosure statements, and acknowledged significant gaps in staff training and internal oversight that contributed to the compliance failures.
ASIC Chair Joe Longo described the penalty as a clear warning to global financial services entities looking to set up shop in Australia, emphasising that firms operating in Australian markets must comply with Australian laws designed to protect retail consumers.
Binance Australia Derivatives had its Australian financial services licence cancelled in April 2023. The company has stated the issue was self-identified and reported to ASIC, with $9 million in compensation already paid to affected users in November 2023.
The case highlights the growing regulatory scrutiny facing cryptocurrency exchanges operating in Australia, and underscores ASIC’s determination to hold digital asset platforms to the same compliance standards as traditional financial services providers.
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