Binance Australia has been fined $6.9 million for misclassifying 85% of derivatives users

The court said the losses were estimated at more than $8.2 million.

According to reports on March 27, the Australian Federal Court imposed a civil fine of 10 million Australian dollars (about 6.9 million US dollars) on the local Binance subsidiary, registered under the name Oztures Trading Pty Ltd.

Australian Securities and Investments Commission (ASIC) He said Binance Australia’s derivatives platform misclassified more than 500 investors as “wholesale clients.”

The regulator added that the operation took place between July 2022 and April 2023, exposing these clients to high-risk crypto asset derivatives. Their losses amounted to more than 12 million Australian dollars (8.27 million US dollars).

Another local report I was informed The company admitted to “serious customer onboarding failures and poor staff training that allowed customers seeking verification as sophisticated investors to make unlimited attempts at a multiple-choice test until they received a passing score for Binance to assess them as eligible for sophisticated investor status.”

The company’s senior compliance officers failed to provide adequate oversight or review of customer requests, resulting in worsening onboarding and classification processes.

One customer reportedly wrote that they were an “exempt public authority,” without providing further verification, and Binance incorrectly assessed them as qualifying as a professional investor.

The exchange also had to pay A$13.1 million (US$12 million) in compensation to affected users, which ASIC will oversee in 2023.

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“Binance failed to set up basic compliance checks and improperly approved hundreds of applications for complex wholesale investor products. Binance’s shortcomings left more than 85% of its Australian client base exposed to high-risk products they should never have access to, and without important consumer protections or rights, costing retail investors millions. “This was not just a technical breach – it directly resulted in customer losses of more than $12 million,” ASIC Chairman Joe Longo commented.