ASIC Sues Binance Australia Over Consumer Protection Failures 

The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, accusing the platform of failing to protect consumers. 

The regulator claims Binance misclassified over 500 retail clients as wholesale investors between July 2022 and April 2023. Binance reportedly denied them critical protections under Australian financial laws.

Another Binance Lawsuit Due to Regulatory Incompliance

According to ASIC, retail clients are entitled to greater safeguards, including a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and access to internal dispute resolution mechanisms. 

Deputy Chair Sarah Court criticized Binance’s compliance practices, calling them “woefully inadequate.” She stated that many clients suffered significant financial losses due to the lack of proper protections.

“ASIC will continue to use the full range of regulatory and enforcement tools to safeguard consumers and uphold market integrity in the digital asset sector,” said Sarah Court 

The lawsuit alleges several violations, including Binance’s failure to issue mandatory PDS and TMD documents, insufficient dispute resolution systems, and inadequate employee training for regulatory compliance. 

Also, the regulator also Binance of failing to conduct its business “efficiently, honestly, and fairly.” It will now seek penalties, declarations and adverse publicity orders with this lawsuit. 

In April 2023, following a review of its operations, Binance’s Australian financial services license was canceled. ASIC stated the cancellation came after Binance requested it. 

“There are some misinformation (and confusion) about #Binance Australia. We requested to cancel the derivatives license yesterday. The platform had exactly 104 users as of yesterday. Binance_AUS will continue to operate the spot exchange in AU,” former Binance CEO CZ wrote back in 2023. 

This legal action highlights ASIC’s increased focus on regulating the crypto industry. Recently, the regulator fined Kraken’s Australian operator $12.8 million for compliance breaches. 

Another Australian agency, AUSTRAC, has also stepped up its scrutiny of crypto ATMs. The agency will require operators to perform strict KYC checks, monitor transactions, and report cash withdrawals exceeding $10,000.

Globally, Binance continues to face mounting legal challenges. The Indian government has reportedly accused the platform of owing $85 million in unpaid taxes. 

In the UK, a former Binance employee has filed a whistleblower lawsuit, alleging a colleague solicited a bribe from a customer for preferential treatment. The whistleblower also claims wrongful termination after reporting the misconduct.

Overall, the lawsuit against Binance Australia reflects growing regulatory pressure on crypto platforms as governments intensify efforts to enforce compliance with financial laws.