Image credit: The Byteline

The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, accusing the crypto trading platform of misclassifying over 500 retail clients as wholesale investors between July 2022 and April 2023.

ASIC alleges this misclassification deprived clients of key consumer protections under Australian financial laws, including access to a Product Disclosure Statement (PDS) and internal dispute resolution processes.

ASIC Deputy Chair Sarah Court criticized Binance’s compliance measures as “woefully inadequate,” claiming many clients suffered significant financial losses due to improper safeguards.

The lawsuit highlights regulatory failures, including the lack of a PDS, inadequate dispute resolution mechanisms, and insufficient compliance training for employees.

The legal action follows ASIC’s decision to cancel Binance’s Australian financial services license in April 2023 and aligns with the regulator’s broader crackdown on crypto platforms.

ASIC recently fined Kraken’s Australian operator $12.8 million for similar breaches and is drafting new guidelines requiring crypto exchanges to obtain financial services licenses under the Corporations Act.

Meanwhile, Binance also faces intellectual property theft allegations in the U.S., with accusations of trademark infringement tied to its PNUT-themed memecoin.

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