BroadChain has learned that on March 27, the Federal Court of Australia imposed a A$10 million (approximately $6.9 million USD) penalty on Binance Australia's derivatives division, Oztures Trading Pty Ltd. The court found that between July 2022 and April 2023, the entity wrongly classified more than 85% of its local customers as wholesale investors. This misclassification left 524 retail clients exposed to high-risk crypto derivatives without the statutory consumer protections they were entitled to, leading to estimated trading losses of A$8.66 million (about $5.9 million USD) and fee losses of A$3.9 million (roughly $2.7 million USD).
Joe Longo, Chair of the Australian Securities and Investments Commission (ASIC), stated that Binance lacked fundamental compliance review processes, leading to the erroneous approval of hundreds of wholesale investor applications. According to the court's Statement of Facts, Binance acknowledged flaws in its client onboarding system. These included allowing applicants to retake eligibility assessments repeatedly until they passed, and inadequate review of application documents by senior compliance personnel.
Binance admitted to six regulatory breaches, including failures to provide product disclosure statements to retail clients, to conduct target market determinations, and to maintain a compliant internal dispute resolution system. This penalty is separate from the approximately A$13.1 million (around $9 million USD) in customer compensation previously overseen by ASIC. The entity's Australian Financial Services Licence was revoked in April 2023.