Binance Australia Fined $10M Over Client Misclassification

 

The Federal Court of Australia has ordered Oztures Trading Pty Ltd, the company behind Binance Australia Derivatives, to pay 10 million Australian dollars (about $6.9 million USD). The penalty follows the company’s admission that it misclassified 85% of its Australian clients.

 

According to the Australian Securities and Investments Commission (ASIC), around 524 retail investors were incorrectly classified as wholesale clients. Of these, 460 were categorized as sophisticated investors and 33 as wealthy traders between July 2022 and April 2023.

 

ASIC said the misclassification exposed these retail investors to high-risk crypto derivatives they should not have accessed. The regulator reported that the affected investors suffered losses exceeding $6 million and paid roughly $2.6 million in trading fees.

 

In a statement of agreed facts, Binance also admitted to several other compliance failures, including not fully disclosing information to retail clients, failing to maintain a compliant dispute resolution system, and not making a target market determination as an operational crypto entity.

 

Image credit: ASIC

 

Binance, through its Australian entity Oztures, was also found to have failed to comply with the country’s regulator’s requirements regarding employee training.

 

“Binance’s senior compliance staff provided inadequate oversight or review of client applications and supporting documentation, further weakening the onboarding and classification processes,” ASIC wrote on its official website.

 

Binance Previous Settlement With the Australian Regulator

The $6.9 million penalty imposed by the country’s regulator on Binance comes three years after the company paid $9 million in compensation to affected clients.

 

Although the misclassification issue, which began in 2023, was self-identified, Binance had its operating license withdrawn by Australian authorities, in addition to the compensation it paid.

 

Countries Intensify Crackdown on Compliance Violators

The crackdown on Binance’s Australian operations by the country’s financial regulator is one of several regulatory actions targeting crypto firms in recent weeks. Just a few weeks earlier, South Korean regulators fined Bithumb $25 million for anti-money laundering (AML) and compliance violations.

 

Regulators in multiple jurisdictions have taken action against crypto-related companies. 

 

In Canada, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the country’s financial intelligence unit and anti–money laundering regulator, has revoked the registrations of 47 crypto-linked money services businesses this year, accounting for the majority of its 50 total revocations. 

 

The agency has indicated it will continue enforcement actions against non-compliant entities. Prediction market companies have also faced increased regulatory scrutiny, including restrictions and bans, amid concerns over compliance and regulatory violations.