Binance Australia has been fined $6.9 million after investors lost millions on derivatives

Oztures Trading Pty Ltd, operating under the name Binance Australia Derivatives, has been ordered by the Australian Federal Court to pay a fine of A$10 million (about US$6.9 million) after the exchange admitted exposing 524 retail investors to high-risk cryptocurrency derivatives products without the required consumer protections.

The misclassification occurred between July 2022 and April 2023, with Binance admitting to failing to qualify customers that allowed retail customers to make unlimited attempts at a multiple-choice test until they received a passing score to qualify as sophisticated investors, according to ASIC announcement.

The misclassified client group incurred trading losses of A$8.66 million (about US$6 million) and paid fees of A$3.89 million (US$2.67 million). Of the 524 misclassified clients, 460 were incorrectly classified as meeting the sophisticated investor test, 33 as meeting the individual wealth test, 26 as professional investors, 4 as corporate related, and 1 as meeting the large business test.

In one example, Binance evaluated an individual as a professional investor based solely on his or her claim of being an “exempt PA,” without adequate verification.

Decryption She reached out to Binance for comment but did not immediately receive a response.

“Binance failed to prepare basic compliance checks and improperly approved hundreds of applications for wholesale and complex investor products,” ASIC Chairman Joe Longo said in a statement. “Binance’s flaws have left more than 85% of its Australian customer base exposed to high-risk products they should never have access to, and without important consumer protections or rights, costing retail investors millions.”

Judge Moshinsky also ordered Binance to contribute to ASIC’s costs, adding approx 13.1 million Australian dollars In compensation already paid to affected customers in 2023.