Key Takeaways
- On Thursday, Binance revealed that it had incorrectly tagged 500 Australian users as “wholesale investors,”
- Trading in crypto futures is only restricted to institutional and high-volume investors on the Binance platform in Australia.
Australian financial market regulator- the Australian Securities and Investments Commission (ASIC), is undertaking a targeted review of crypto exchange Binance Australia’s derivatives business.
This latest development comes amid Binance on Thursday revealing that it had incorrectly tagged 500 Australian users as “wholesale investors,” paving the way for their derivative positions to be unceremoniously closed. Trading in cryptocurrency futures is only restricted to institutional and high-volume investors on the Binance platform in Australia.
As per an ASIC spokesperson, the review would include Binance’s classification of retail clients and wholesale clients. “We are conducting a targeted review of Binance Australia Derivatives’ financial services business in Australia, including its classification of retail clients and wholesale clients,”
Last year, ASIC confirmed the extension of the ban on the issue and distribution of binary options to Aussie retail clients until 1 October 2031, citing high rates of losses among traders.
“ASIC is aware of Binance’s social media posts overnight stating that it had incorrectly classed a group of Australian consumers as wholesale investors. It has not yet reported these matters to ASIC in accordance with its obligations under its Australian Financial Services Licence”, the spokesperson noted. ASIC has, however, clarified that it had not been contacted by the company directly about the error.
In response to the Thursday incident, Binance co-founder and CEO Changpeng “CZ” Zhao had tweeted all users will be compensated for any losses adding that the exchange is looking into the situation to see if reopening futures in Australia will be an option in the future. He further urged users to ignore FUD- fear, uncertainty, and doubt.
Responding to the development, a Binance spokesperson also said the exchange is “committed” to following all relevant Australian laws. Binance Australia Derivatives was officially launched in July 2022 for eligible Australian wholesale clients.
Binance, the world’s leading crypto exchange, has been slowly expanding its presence in recent months. The exchange now has regulatory approval in several EU member states, including France, Italy, Lithuania, Spain, Cyprus, Sweden, and Poland.
