ASIC Sues Binance For Denying Important Consumer Protections

The Australian corporate watchdog sued Binance’s Australian arm for failing to protect consumers misclassified as ‘wholesale clients.’ The investors were apparently exposed to highly speculative and risky crypto products, the Australian Securities and Investments Commission (ASIC) claimed.

Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, offered crypto derivative products to 505 retail investors from July 2022 to April 2023. However, the investors representing about 83% of its local clientele were misclassified as wholesale clients.

As a result, the unit failed to provide important rights and consumer protections under Australian financial services laws, ASIC noted. This means Binance failed to provide product disclosure statement and access to a compliant dispute resolution scheme.

“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,” said ASIC Deputy Chair Sarah Court.

She added that many retail clients trading financial products suffered significant loss during the period.

“In 2023, we oversaw compensation payments by Binance of approximately $13 million to affected clients.”

Binance Failed to Make Target Market Determination

ASIC has further sued the exchange for not making a target Target Market Determination, nor having a compliant internal dispute resolution standards.

The lack of dispute resolution denies clients a structured mechanism to address grievances.

Additionally, Binance failed to ensure that its financial services were delivered efficiently, honestly, and fairly, the regulator stressed. The exchange has also been accused of not adhering to license conditions and inadequate employee training.

In April 2023, the ASIC cancelled the Australian financial services license held by Binance. “Our targeted review of these matters is ongoing, including focus on the extent of consumer harms,” the regulator said at the time.

The news comes a week after the corporate watchdog aims to provide clearer legal guidance for digital assets, aiming to provide clearer legal guidance for digital assets.

Source: cryptonews.com