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ASIC Reviews Binance Australia’s Derivatives Services After Misclassification

Australian regulator reviews Binance’s derivatives services following the cryptocurrency exchange’s incorrect tagging of 500 Australian users as “wholesale investors.”
ASIC Reviews Binance Australia's Derivatives Services After Misclassification

Binance Australia is under review by the Australian Securities and Investments Commission (ASIC) for its derivatives business, particularly its classification of retail and wholesale clients. This comes after Binance announced on Thursday that it had wrongly classified 500 Australian users as “wholesale investors,” leading to the closure of their derivative positions. The Australian regulations do not permit retail traders to trade futures and financial derivatives.

The Misclassification of Australian Users

On Thursday, Binance admitted to mistakenly tagging 500 Australian users as “wholesale investors,” resulting in the closure of their derivative positions. The exchange has already reached out to the affected users and promised to fully compensate them.

Binance’s social media posts regarding the matter caught ASIC’s attention. The regulator has not yet received a formal report from Binance regarding the matter as required by its Australian Financial Services Licence.

ASIC Review of Binance Australia’s Derivatives Business

ASIC’s review of Binance Australia’s derivatives business is focused on the exchange’s “classification of retail clients and wholesale clients.” The regulator has not given any details on when it will conclude the review.

Binance Australia is a subsidiary of Binance, a leading cryptocurrency exchange. The exchange has been operating in Australia since July 2020 and offers trading services for cryptocurrencies and derivatives.

Binance has been facing regulatory scrutiny from various countries in recent months. The exchange has been banned in some jurisdictions, including the United Kingdom and Japan, for operating without the required licenses.

Binance’s Troubles with Global Regulators

Binance has been the subject of regulatory investigations in several countries. The exchange has been banned in the UK and Japan, and it has also faced regulatory scrutiny in the United States, Canada, and Thailand, among others.

The UK Financial Conduct Authority (FCA) banned Binance from conducting any regulated activity in the country in June 2021. The regulator said that Binance Markets Limited, the UK subsidiary of Binance, is not permitted to undertake any regulated activity without the prior written consent of the FCA.

The Japanese regulator, the Financial Services Agency, issued a warning against Binance in June 2021, stating that the exchange is operating in the country without a license.

In the United States, the Commodity Futures Trading Commission (CFTC) is investigating whether Binance allowed US residents to trade on its platform, which is not permitted under US regulations.

Binance’s Response to Regulatory Pressure

Binance has responded to regulatory pressure by hiring more compliance staff and strengthening its compliance policies. The exchange has also announced plans to establish regional headquarters in different countries to comply with local regulations.

Binance has also delisted certain cryptocurrencies that were not compliant with local regulations. The exchange has also launched a “regulatory compliance plan” to improve its compliance practices.

Binance CEO, Changpeng Zhao, has acknowledged the challenges the exchange is facing with regulators. In a recent blog post, Zhao said that the exchange is “in the process of pivoting from a tech startup to a financial service provider.” He also acknowledged that the exchange needs to improve its compliance practices and that it is committed to working with regulators to address their concerns.


In conclusion, the Australian Securities and Investments Commission’s targeted review of Binance Australia’s derivatives business serves as a reminder of the importance of adhering to local regulations in the financial industry. It also highlights the need for increased vigilance in ensuring that all customers are properly classified and that appropriate measures are taken to prevent errors such as incorrectly tagging customers as “wholesale investors.” Binance’s prompt response in contacting impacted users and offering full compensation is commendable, and it remains to be seen what actions, if any, will be taken by ASIC following its review.

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