The Australian Securities and Investments Commission (ASIC) has filed a lawsuit in the Federal Court against Oztures Trading Pty Ltd, operating as Binance Australia Derivatives, over alleged consumer protection failures affecting more than 500 retail clients.
ASIC alleges that between 7 July 2022, and 21 April 2023, Binance misclassified 505 Australian retail investors, representing 83% of its local client base, as wholesale clients.
This misclassification reportedly denied these clients critical consumer rights and protections, including access to a product disclosure statement, a target market determination under design and distribution obligations, and a compliant internal dispute resolution system.
ASIC Deputy Chair Sarah Court stated that Binance’s compliance systems were “woefully inadequate” and exposed hundreds of clients to high-risk, speculative crypto derivative products without proper safeguards.
She noted that many clients suffered significant financial losses, with Binance paying approximately US$13 million in compensation to affected individuals in 2023 under ASIC’s oversight.
“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. Many of these clients suffered significant financial losses. In 2023, we oversaw compensation payments by Binance of approximately US$13 million to affected clients.
Crypto derivative products are inherently risky and complex, so it is critical that retail clients are classified correctly. Those classifications ensure they receive the required consumer protections, and the information required to make an informed investment decision.”
Court said.
The regulator further alleges that Binance failed to ensure that its financial services were provided efficiently, honestly, and fairly.
Additionally, ASIC claims that Binance did not comply with its license conditions and failed to adequately train its employees to ensure competence.
This legal action coincides with ASIC’s ongoing efforts to clarify regulatory requirements in the digital asset sector.
Earlier this month, the regulator released a consultation paper outlining proposed updates to its guidelines on crypto assets and related products to provide greater clarity on how financial product definitions apply under current laws.
ASIC is seeking penalties, declarations, and adverse publicity orders in its case against Binance.
Featured image credit: Edited from Freepik
