ASIC Sues Binance in Australia for Consumer Protection Breaches
The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Binance Australia Derivatives, operated by Oztures Trading Pty Ltd, over alleged consumer protection failures.
Court documents claim the company misclassified over 500 retail clients as wholesale clients, denying them vital rights under Australian financial services laws.
The allegations center on Binance’s operations between July 7, 2022, and April 21, 2023, during which 505 Australian retail investors—accounting for 83% of its local client base—were allegedly offered high-risk crypto derivative products without adequate protections.
"‘Our case alleges Binance’s compliance systems were woefully inadequate and exposed more than 500 clients to high-risk, speculative products without the right consumer protections in place. Many of these clients suffered significant financial losses. In 2023, we oversaw compensation payments by Binance of approximately $13 million to affected clients," ASIC deputy chair Sarah Court said in a statement.
Retail clients trading financial products in Australia are entitled to safeguards under the Corporations Act 2001. These include access to a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and a compliant internal dispute resolution system. ASIC alleges that Binance failed to provide these protections and did not provide a PDS to retail clients, make a TMD as required under design and distribution obligations, ensure that financial services were provided efficiently, honestly, and fairly, and train its employees adequately to ensure competency.
ASIC also claims Binance failed to comply with the conditions of its Australian Financial Services (AFS) licence.
Binance Australia Derivatives is part of the global Binance group, one of the largest cryptocurrency exchanges by trading volume worldwide. ASIC began a targeted review of Binance’s operations in December 2022, focusing on client classification practices. This review culminated in the cancellation of Binance’s AFS licence in April 2023, following a request by the company.
In 2023, ASIC oversaw Binance’s payment of approximately $13 million in compensation to clients who were misclassified. The regulator stated that many of these clients had suffered financial losses due to their exposure to speculative crypto derivative products.
The case against Binance comes amid ASIC’s broader efforts to improve regulatory clarity for the digital asset sector. Earlier this month, the regulator released Consultation Paper 381, which proposes updates to existing guidance on how financial product definitions apply to digital assets and related services.
“Many digital assets and related products are financial products under the current law. We are consulting with the sector to improve regulatory clarity, and ASIC will continue to use the full range of regulatory and enforcement tools to safeguard consumers and uphold market integrity in the digital asset sector,” Court said.
ASIC previously brought civil penalty proceedings against digital asset exchange operator Bit Trade Pty Ltd, which operated crypto exchange Kraken in Australia, for design and distribution obligation failures, with the Federal Court ruling in favour of ASIC.