ASIC sues crypto giant Binance over alleged consumer protection failures

Australia’s corporate watchdog is suing the local arm of global crypto giant Binance after more than 500 retail clients were “denied important consumer protections”.

The Australian Securities and Investments Commission claims Oztures Trading Pty Ltd — trading as Binance Australia Derivatives — offered crypto derivative products to 505 local retail investors who were misclassified as wholesale clients.

This represented 83 per cent of its Australian client base.

Unlike wholesale clients, retail clients trading financial products, such as crypto derivative products, are afforded consumer protections under Australian financial services laws.

These include the requirement to be provided with a product disclosure statement and access to a compliant dispute resolution scheme, ASIC said.

Between July 2022 and April 2023, Binance allegedly failed to ensure the services it provided under its Australian financial services licence were provided efficiently, honestly and fairly.

ASIC deputy chair Sarah Court said crypto derivative products were inherently risky and complex, hence it was critical retail clients were classified correctly.

‘Our case alleges Binance’s compliance systems were woefully inadequate and exposed more than 500 clients to high-risk, speculative products without the right consumer protections in place,” she said on Wednesday.

“Many of these clients suffered significant financial losses.”

ASIC cancelled the financial services licence of Binance in April 2023 after it incorrectly classified hundreds of retail customers as wholesale investors — which the new case is focused on.

Later that year, the regulator oversaw compensation payments of $13 million to those clients who were misclassified.

The regulator will be seeking penalties, declarations and adverse publicity orders.