The Australian securities regulator announced on Friday that the local Binance unit would be required to pay A$10 million ($6.9 million) after misclassifying over 85% of its Australian clients and exposing them to high-risk crypto products. In late 2024, the Australian Securities and Investments Commission (ASIC) filed a lawsuit claiming that the misclassification exposed retail investors to high-risk crypto derivatives without the necessary safeguards. This lawsuit resulted in the imposition of the penalty. In a statement of agreed facts with ASIC, Binance Australia Derivatives, a component of the world's largest crypto exchange by trading volume, acknowledged the errors. The Federal Court found that, between July 2022 and April 2023, Binance Australia classified 524 retail investors incorrectly as wholesale clients, providing them with access to "high-risk" cryptocurrency derivatives without providing them with the necessary consumer protections. Advertisement Continue scrolling As a result, the misclassified client group suffered trading losses totaling A$8.7 million and paid fees totaling A$3.9 million. Binance Australia acknowledged serious lapses in client onboarding and staff training that allowed users to repeatedly attempt a multiple-choice test until they achieved a score qualifying as sophisticated investors.
In one instance, a client was incorrectly categorized as a professional investor because they self-certified as an "exempt public authority" without conducting proper verification. According to the ASIC, the penalty is in addition to the approximately A$13.1 million in compensation that Binance Australia will pay to the affected customers in 2023. Binance Australia in an email response to Reuters said, "The issue was self-identified, reported to ASIC, and fully remediated in 2023".