Originally published on: December 18, 2024
The Australian Securities and Investments Commission (ASIC) has taken legal action against Binance Australia Derivatives, a crypto derivatives trading platform, for alleged consumer protection failures.
According to ASIC, Binance misclassified more than 500 retail clients as wholesale investors between July 2022 and April 2023, depriving them of crucial legal protections under Australian financial laws.
Retail clients are entitled to robust consumer protections, including access to a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and internal dispute resolution mechanisms. ASIC Deputy Chair Sarah Court criticized Binance’s compliance systems as “woefully inadequate,” leading to significant financial losses for many clients.
The legal action outlines several regulatory infractions, such as the failure to issue a PDS or TMD, deficient dispute resolution processes, and insufficient employee training for compliance with financial services licenses. In response to these breaches, ASIC canceled Binance’s Australian financial services license in April 2023.
This lawsuit underscores ASIC’s heightened scrutiny of the crypto industry. The regulator recently imposed a $12.8 million fine on Kraken’s Australian operator for regulatory violations and is preparing new guidelines mandating financial services licenses for crypto exchanges under the Corporations Act.
Additionally, Binance is facing allegations of intellectual property theft in the United States regarding its PNUT-themed memecoin. The owner of Peanut the Squirrel has accused Binance of trademark infringement and issued a cease-and-desist letter.
Stay informed on the latest developments in crypto laws and regulations by subscribing to our Law Decoded newsletter. Arm yourself with knowledge to navigate the complex world of crypto investments responsibly. Subscribe now to receive updates every Monday.
Don’t miss out on the latest news and insights. Subscribe to our newsletter for weekly updates on crypto laws and regulations. By subscribing, you agree to our Terms of Services and Privacy Policy.
