The Federal Court of Australia has fined Binance Australia A$10 million (approximately $6.9 million) for a serious compliance failure in its client onboarding process. The Australian Securities and Investments Commission (ASIC) stated the exchange misclassified over 500 retail investors as “wholesale clients,” exposing them to high-risk crypto derivatives and resulting in client losses exceeding $8.2 million. Binance has also paid approximately $12 million in compensation to affected users.
The Federal Court of Australia has imposed a civil penalty of approximately $6.9 million on the local branch of cryptocurrency exchange Binance. The penalty, levied against Oztures Trading Pty Ltd, follows an investigation by the Australian Securities and Investments Commission (ASIC).
ASIC said the exchange’s derivatives platform incorrectly categorized more than 500 retail investors as “wholesale clients.” This misclassification occurred between July 2022 and April 2023, allowing the clients access to high-risk crypto-asset derivatives.
The regulator reported that these clients suffered losses worth more than $8.2 million. Another local report informed that Binance admitted to a “serious failure in client onboarding and poor staff training.”
“Binance failed to set up basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products,” commented ASIC’s Chair, Joe Longo. “This wasn’t just a technical breach – it directly resulted in over $12 million in client losses.”
The company’s compliance staff provided inadequate oversight, failing to properly review client applications. In one instance, a client was incorrectly approved as a professional investor after simply writing they were an “exempt public authority.”
The exchange paid approximately $12 million in compensation to the affected users in 2023, a process overseen by ASIC. The court’s decision underscores regulatory scrutiny of cryptocurrency platforms’ compliance with local investor protection laws.
