Orhan 
The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, the local subsidiary of the leading cryptocurrency exchange Binance offering derivative products. ASIC alleges that Binance misclassified over 500 retail customers, denying them access to legal consumer protections.
Binance’s legal troubles in Australia indicate tighter regulatory scrutiny within the crypto industry. ASIC aims to strengthen consumer rights protection not only through individual lawsuits but also via sectoral reforms. This case highlights the global regulatory and legal challenges faced by cryptocurrency exchanges.
Why Is Binance Facing This Issue?
According to ASIC, Binance categorized retail investors as “wholesale investors” between July 2022 and April 2023. This classification prevented these investors from accessing certain protections provided by Australian financial laws, such as:
- Product Disclosure Statements (PDS)
- Target Market Determinations (TMD)
- Dispute resolution mechanisms supporting consumer rights
- Additional regulatory safeguards for investor protection
ASIC Deputy Chair Sarah Court described Binance’s processes as “grossly inadequate” and stated that these misclassifications led to significant financial losses for many customers.
ASIC’s Claims Against Binance
The lawsuit alleges that Binance failed to comply with its Australian Financial Services License (AFSL) obligations, neglected basic regulatory requirements, and provided insufficient compliance training for its staff. Binance is also accused of failing to offer its services “efficiently, honestly, and fairly.” Following ASIC’s pressure, Binance requested the cancellation of its AFSL in April 2023.
Compensation for Misclassified Customers
After ASIC’s investigation, Binance compensated 435 misclassified retail customers with approximately 13.1 million AUD (8.29 million USD). However, ASIC continues to pursue the case, seeking penalties, adverse publicity orders, and declarations against Binance.
Binance’s Legal Challenges in the U.S.
Binance is also facing regulatory scrutiny worldwide, including in the United States. The company is currently battling intellectual property infringement allegations. Specifically, Mark Longo, the creator of “Peanut the Squirrel,” accused Binance of trademark infringement related to the PNUT memecoin, issuing a cease-and-desist letter against the exchange.
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