Australia court fines Binance unit US$6.9 million over client onboarding failures

[SYDNEY] The Australian federal court has ordered Binance’s local unit to pay US$6.9 million for misclassifying over 85 per cent of its Australian clients that exposed them to high-risk crypto products, the country’s securities regulator said on Friday (Mar 27).

The penalty follows a lawsuit by the Australian Securities and Investments Commission (ASIC) in late 2024 alleging the misclassification exposed retail investors to high-risk crypto derivatives without required protections.

Binance Australia Derivatives, part of the world’s largest crypto exchange by trading volume, admitted the failures in a statement of agreed facts with ASIC.

The Federal Court found that between July 2022 and April 2023, Binance Australia improperly classified 524 retail investors as wholesale clients, granting them access to “high-risk” cryptocurrency derivatives without required consumer protections.

That led to the misclassified client group incurring A$8.7 million (S$7.71 million) in trading losses and paying A$3.9 million in fees.

Binance Australia acknowledged serious lapses in client onboarding and staff training that allowed users to repeatedly attempt a multiple-choice test until they achieved a score qualifying as sophisticated investors.

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In one case, a client was incorrectly deemed a professional investor based solely on a self-certification as an “exempt public authority”, without proper verification.

The ASIC said the penalty is in addition to about A$13.1 million compensation paid by Binance Australia to the affected clients in 2023.

Binance Australia in an email response to Reuters said, “The issue was self-identified, reported to ASIC, and fully remediated in 2023”. REUTERS